Stephen F. Austin
State University
Minutes of the
Board of Regents
Nacogdoches, Texas
June 8,2005
Volume 212
Table of Contents
Board Minutes for June 8, 2005
Volume 212
05-43 Resolution Authorizing the Sale of the Texas Public Finance Authority
Stephen F. Austin State University Revenue Financing System revenue Bonds,
Series 2005, in the Aggregate Principal Amount of $17,215,000; Authorizing
Actions by the Texas Public Finance Authority, Stephen F. Austin State
University, and Representatives thereof in Connection with the Sale and
Delivery of said Bonds; and Resolving Other Matters Related Thereto 3
Minutes of the Phone Meeting of the
Board of Regents of Stephen F. Austin State University
Nacogdoches, TX
June 8,2005
The Meeting of the Board of Regents was called to order at 1:03 p.m., Wednesday June
85 2005 by Chairman Fred Wulf.
PRESENT: (in Nacogdoches, TX):
Board Members: Fred Wulf
Joe Max Green
Vice-President: Roland Smith
Baker Pattillo
General Counsel: Yvette Clark
SFA administrators, staff, and visitors
PRESENT: (On the Phone):
Board Members: Valerie Ertz
Kenneth James
Gary Lopez
Paul Pond
Mike Wilhite
Texas Public Finance Authority: Kim Edwards
Judith Porris
First Southwest Company: Mary Williams
Delgado, Acosta, Braden & Jones: Paul Braden
ABSENT:
Board Members: Margarita de la Garza-Grahm
Lyn Stevens
President: Tito Guerrero
Vice-President: Mary Cullinan
Jerry Holbert
Kim Edwards, from the Texas Public Finance Authority, reported that the sale of bonds
took place in the morning of June 8, 2005. At 11:00 a.m., the TPFA board formally
approved the sale to Merrill Lynch. Merrill Lynch submitted the lowest of 8 bids
received. The interest rate is 4.1236%. After her presentation, the Board formally took
up the resolution below:
05-43
Resolution Authorizing the Sale of the Texas Public Finance Authority
Stephen F. Austin State University Revenue Financing System revenue Bonds,
Series 2005, in the Aggregate Principal Amount of $17,215,000; Authorizing
Actions by the Texas Public Finance Authority, Stephen F. Austin State
University, and Representatives thereof in Connection with the Sale and
Delivery of said Bonds; and Resolving Other Matters Related Thereto.
Upon motion from Regent Ertz and seconded by Regent Pond with all members voting
aye, the Board of Regents adopted the resolution. The resolution is attached in the
appendix.
Upon motion from Regent Ertz and seconded by Regent Wilhite, the meeting was
adjourned by Chairman Wulf at 1:11 p.m.
APPENDIX SECTION
RESOLUTION
AUTHORIZING THE SALE OF THE TEXAS PUBLIC
FINANCE AUTHORITY STEPHEN F. AUSTIN STATE
UNIVERSITY REVENUE FINANCING SYSTEM REVENUE
BONDS, SERIES 2005, IN THE AGGREGATE PRINCIPAL
AMOUNT OF $17,215,000; AUTHORIZING ACTIONS BY
THE TEXAS PUBLIC FINANCE AUTHORITY, STEPHEN F.
AUSTIN STATE UNIVERSITY, AND REPRESENTATIVES
THEREOF IN CONNECTION WITH THE SALE AND
DELIVERY OF SAID BONDS; AND RESOLVING OTHER
MATTERS RELATED THERETO
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RESOLUTION
AUTHORIZING THE SALE OF THE TEXAS PUBLIC
FINANCE AUTHORITY STEPHEN F. AUSTIN STATE
UNIVERSITY REVENUE FINANCING SYSTEM REVENUE
BONDS, SERIES 2005, IN THE AGGREGATE PRINCIPAL
AMOUNT OF $17,215,000; AUTHORIZING ACTIONS BY
THE TEXAS PUBLIC FINANCE AUTHORITY, STEPHEN F.
AUSTIN STATE UNIVERSITY, AND REPRESENTATIVES
THEREOF IN CONNECTION WITH THE SALE AND
DELIVERY OF SAID BONDS; AND RESOLVING OTHER
MATTERS RELATED THERETO
TABLE OF CONTENTS Page
PREAMBLE 1
Section 1. REVENUE FINANCING SYSTEM AND ISSUANCE OF
PARITY OBLIGATIONS 4
Section 2. SECURITY AND PLEDGE 4
Section 3. COVENANTS RELATING TO PLEDGED REVENUES 5
Section 4. GENERAL COVENANTS 6
Section 5. ISSUANCE OF ADDITIONAL OBLIGATIONS 9
Section 6. DISPOSITION OF ASSETS ATTRIBUTABLE TO
FINANCING SYSTEM PARTICIPANTS 9
Section 7. COMBINATION, DIVISION, RELEASE AND ADMISSION
OF NEW INSTITUTIONS UNDER THE FINANCING SYSTEM . 10
Section 8. WAIVER OF CERTAIN COVENANTS 11
Section 9. AMOUNT, PURPOSE, AND DESIGNATION OF THE BONDS . 11
Section 10. DATE, DENOMINATIONS, NUMBERS, MATURITIES
AND TERMS OF BONDS 11
Section 11. INTEREST 13
Section 12. REGISTRATION, TRANSFER, AND EXCHANGE;
AUTHENTICATION; BOOK-ENTRY-ONLY SYSTEM 13
Section 13. FORM OF BONDS 18
Section 14. INDIVIDUALS NOT LIABLE 18
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Section 15. SECURITY FOR THE BONDS 19
Section 16. PAYMENTS 19
Section 17. DAMAGED, MUTILATED, LOST, STOLEN, OR
DESTROYED BONDS 19
Section 18. REMEDIES 20
Section 19. DEFEASANCE OF OBLIGATIONS 20
Section 20. AMENDMENT OF RESOLUTION 22
Section 21. COVENANTS REGARDING TAX-EXEMPTION 24
Section 22. PRIOR REDEMPTION 27
Section 23. OTHER REPRESENTATIONS AND COVENANTS 28
Section 24. CONTINUING DISCLOSURE 28
Section 25. RESOLUTION TO CONSTITUTE A CONTRACT;
EQUAL SECURITY 31
Section 26. SEVERABILITY OF INVALID PROVISIONS 31
Section 27. PAYMENT AND PERFORMANCE ON BUSINESS DAY 31
Section 28. LIMITATION OF BENEFITS WITH RESPECT TO
THE RESOLUTION 31
Section 29. CUSTODY, APPROVAL, BOND COUNSEL'S
OPINION, CUSIP NUMBERS, PREAMBLE AND INSURANCE . 31
Section 30. FURTHER PROCEDURES 32
Section 31. REPEAL OF CONFLICTING RESOLUTIONS 32
Section 32. REFERENCES TO AUTHORITY 32
Section 33. PERFECTION OF PLEDGE 32
Section 34. BOND INSURANCE 33
Section 35. PUBLIC NOTICE 33
SCHEDULE I
EXHIBIT A DEFINITIONS A-l
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EXHIBIT B FORM OF BONDS B-l
EXHIBIT C DESCRIPTION OF ANNUAL FINANCIAL INFORMATION ... C-l
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RESOLUTION
AUTHORIZING THE SALE OF THE TEXAS PUBLIC
FINANCE AUTHORITY STEPHEN F. AUSTIN STATE
UNIVERSITY REVENUE FINANCING SYSTEM REVENUE
BONDS, SERIES 2005, IN THE AGGREGATE PRINCIPAL
AMOUNT OF $17,215,000; AUTHORIZING ACTIONS BY
THE TEXAS PUBLIC FINANCE AUTHORITY, STEPHEN F.
AUSTIN STATE UNIVERSITY, AND REPRESENTATIVES
THEREOF IN CONNECTION WITH THE SALE AND
DELIVERY OF SAID BONDS; AND RESOLVING OTHER
MATTERS RELATED THERETO
WHEREAS, in order to reduce costs, increase borrowing capacity, provide additional
security to the credit markets, and provide greater financial flexibility, the Board of Regents (the
"Board") of Stephen F. Austin State University (the "University") deemed it necessary and desirable
to establish a revenue financing program for revenue supported indebtedness to provide funds to
acquire, purchase, construct, improve, renovate, enlarge or equip property, buildings, structures,
facilities, roads, or related infrastructure at the University, as well as any institution, branch or entity
hereafter placed under the control and governance of the Board, to the extent permitted by Chapter
55, Texas Education Code, including specifically, but not by way of limitation, Section 55.02
thereof; and
WHEREAS, Section 55.13 of the Texas Education Code authorizes the issuance of revenue
bonds for the purpose of providing funds to acquire, purchase, construct, improve, enlarge, and/or
equip any property, buildings, structures, activities, services, operations, or other facilities, for and
on behalf of the University; and
WHEREAS, the University has the authority to pledge the Pledged Revenues, including
student center fees, pursuant to Sections 55.13, 55.17 and 54.520 of the Texas Education Code, for
the purpose of paying principal and interest amounts due on revenue bonds issued for and behalf of
the University from time to time; and
WHEREAS, the University is planning to construct, equip and furnish a new student
residence hall and associated parking garage and passed a Resolution, on March 8,2005, authorizing
a request for financing from the Texas Public Finance Authority (the "Authority");
WHEREAS, the Authority is a public authority and body politic and corporate duly
established and existing under the laws of the State of Texas, including particularly Chapter 1232,
Texas Government Code (hereafter referred to as the "TPFA Act"); and
WHEREAS, Section 1232.101 of the TPFA Act recites that the Authority has the exclusive
authority to act on behalf of the University in issuing bonds on its behalf, and Section 55.13(c) of
the Texas Education Code provides that the Authority shall exercise the authority of the Board to
issue bonds on behalf of the University, in the manner provided by Subchapter B of Chapter 55,
Texas Education Code; and
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WHEREAS, Section 55.13, Texas Education Code, recites that the Authority has all the
rights and duties granted or assigned to and is subject to the same conditions as the Board under
Chapter 55, Texas Education Code; and
WHEREAS, the resolution entitled "Resolution Authorizing the Sale of the Board of Regents
of Stephen F. Austin State University Revenue Financing System, Texas Public Finance Authority
Revenue Bonds, Series 1998, in an Aggregate Principal Amount Not to Exceed $6 Million;
Authorizing Actions by the Texas Public Finance Authority, Stephen F. Austin State University and
Representatives Thereof in Connection with the Sale and Delivery of Said Bonds; and Resolving
Other Matters Related Thereto" (the "Underlying Resolution") was adopted by the Board on July
14, 1998 and by the Authority on August 12, 1998; and
WHEREAS, the Underlying Resolution established the Stephen F. Austin State University
Revenue Financing System for the purpose of providing a financing structure for revenue supported
indebtedness at the University; and
WHEREAS, pursuant to the terms of the Underlying Resolution, the Authority delivered its
Board of Regents of Stephen F. Austin State University Revenue Financing System, Texas Public
Finance Authority Revenue Bonds, Series 1998, in the aggregate principal amount of $6,000,000
(the "Series 1998 Bonds");
WHEREAS, pursuant to the terms of a resolution adopted in compliance with the
requirements of the Underlying Resolution by the Board on March 8, 2000, and by the Authority
on March 8, 2000, the Authority delivered its Board of Regents of Stephen F. Austin State
University Revenue Financing System, Texas Public Finance Authority Revenue Bonds, Series
2000, in the aggregate principal amount of $7,000,000 (the "Series 2000 Bonds"); and
WHEREAS, pursuant to the terms of a resolution adopted in compliance with the
requirements of the Underlying Resolution by the Board on June 18,2002, and by the Authority on
June 18, 2002, the Authority delivered its Board of Regents of Stephen F. Austin State University
Revenue Financing System, Texas Public Finance Authority Revenue Bonds, Series 2002, in the
aggregate principal amount of $14,070,000 (the "Series 2002 Bonds"); and
WHEREAS, pursuant to the terms of a resolution adopted in compliance with the
requirements of the Underlying Resolution by the Board on November 19, 2002, and by the
Authority on November 19,2002, the Authority delivered its Board of Regents of Stephen F. Austin
State University Revenue Financing System, Texas Public Finance Authority Revenue Bonds, Series
2002A, in the aggregate principal amount of $1,320,000 (the "Series 2002A Bonds"); and
WHEREAS, pursuant to the terms of a resolution adopted in compliance with the
requirements of the Underlying Resolution by the Board on February 18,2004, and by the Authority
on February 18, 2004, the Authority delivered its Board of Regents of Stephen F. Austin State
University Revenue Financing System, Texas Public Finance Authority Revenue Bonds, Series
2004, in the aggregate principal amount of $26,030,000 (the "Series 2004 Bonds", and collectively
with the Series 1998 Bonds, the Series 2000 Bonds, the Series 2002 Bonds, and the Series 2004
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Bonds, the "Previously Issued Parity Obligations"); and
WHEREAS, pursuant to the terms of a resolution adopted in compliance with the
requirements of the Underlying Resolution by the Board on August 17,2004, and by the Authority
on August 17, 2004, the Authority delivered its Board of Regents of Stephen F. Austin State
University Revenue Financing System, Texas Public Finance Authority Revenue Bonds, Series
2004A, in the aggregate principal amount of $5,460,000 (the "Series 2004A Bonds", and
collectively with the Series 1998 Bonds, the Series 2000 Bonds, the Series 2002 Bonds, the Series
2004 Bonds, and the Series 2004A Bonds, the "Previously Issued Parity Obligations"); and
WHEREAS, the Previously Issued Parity Obligations were secured by a lien on and pledge
of the "Pledged Revenues" (as defined in the Underlying Resolution), which lien and pledge were
made subject to the lien on and pledge of the "Prior Encumbered Revenues" (as defined in the
Underlying Resolution) securing the "Outstanding Revenue Bonds" (as hereinafter defined); and
WHEREAS, the Underlying Resolution permits the Authority, at the request of the Board,
to issue "Parity Obligations" secured by a lien on and pledge of the Pledged Revenues on a parity
with the Previously Issued Parity Obligations; and
WHEREAS, the Board has requested that the Authority issue bonds on behalf of the
University, pursuant to the authorization granted to the University by Subchapter B of Chapter 55
of the Texas Education Code, as Parity Obligations under the Underlying Resolution, and further
requests that the Authority adopt this Resolution in furtherance of such objective; and
WHEREAS, the Authority finds it necessary and advisable to adopt this Resolution, and
further acknowledges that by adopting this Resolution it will be bound by and agrees to follow the
covenants set forth in this Resolution in its capacity of effecting the sale of the bonds hereinafter
described on behalf of the University; and
WHEREAS, the Board finds it necessary and advisable to adopt this Resolution, and further
acknowledges that by adopting this Resolution it will be bound by and agrees to follow the
covenants set forth in this Resolution; and
WHEREAS, the terms used in this Resolution and not otherwise defined shall have the
meaning given in Exhibit A to this Resolution attached hereto and made a part hereof;
NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF REGENTS OF
STEPHEN F. AUSTIN STATE UNIVERSITY:
NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF
THE TEXAS PUBLIC FINANCE AUTHORITY:
Section 1. REVENUE FINANCING SYSTEM AND ISSUANCE OF PARITY
OBLIGATIONS. In the Underlying Resolution, the Stephen F. Austin State University Revenue
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Financing System (the "Financing System") has been established, for the purpose of providing a
financing structure for revenue supported indebtedness to provide funds to acquire, purchase,
construct, improve, renovate, enlarge or equip property, buildings, structures, facilities, roads or
related infrastructure at the University, as well as at any institution, branch or entity hereafter placed
under the control and governance of the Board, under authority of the pertinent provisions of the
Texas Education Code.
Section 2. SECURITY AND PLEDGE, (a) Pledge. Subject to the provisions of the
resolutions authorizing Prior Encumbered Obligations, Parity Obligations shall be secured by and
payable from a lien on the Pledged Revenues, and the Board hereby assigns and pledges the Pledged
Revenues to the payment of the principal of, premium, if any, and interest on Parity Obligations, and
the Pledged Revenues are further pledged to the establishment and maintenance of any fbnds which
may be provided to secure the repayment of Parity Obligations in accordance with this Resolution.
The Authority, upon approval and consent of the Board, may execute and deliver one or more Credit
Agreements to additionally secure Parity Obligations. Credit Agreements may also be secured by
a pledge of Pledged Revenues on a parity with or subordinate to Parity Obligations.
(b) Additional Participants. As provided in Section 7 of this Resolution, institutions
which may hereafter come under the control and governance of the Board may become Participants
in the Financing System and such institutions may, at such time, have outstanding obligations
secured by the Prior Encumbered Revenues and that, therefore, the lien on and pledge of the Pledged
Revenues established pursuant to this Resolution and effective when such institutions become
Participants in the Financing System will be subject and subordinate only to such institutions'
outstanding Prior Encumbered Obligations.
(c) Restriction on Issuance of Additional Debt on a Parity with Prior Encumbered
Obligations. Except as provided in Section 4(g) and for so long as any Parity Obligations are
Outstanding, no additional bonds, notes, or other obligations may be issued or incurred by the Board
on a parity with any Prior Encumbered Obligations.
(d) Parity Obligations are Special Obligations. All Parity Obligations and the premium,
if any, and the interest thereon shall constitute special obligations of the Board payable from the
Pledged Revenues, and the owners thereof shall never have the right to demand payment out of
funds raised or to be raised by taxation, or from any source other than the source specified in this
Resolution. The obligation of the Board to pay or cause to be paid the amounts payable under this
Resolution out of the Pledged Revenues shall be absolute, irrevocable, complete, and unconditional,
and the amount, manner, and time of payment of such amounts shall not be decreased, abated,
rebated, set-off, reduced, abrogated, waived, diminished, or otherwise modified in any manner or
to any extent whatsoever, regardless of any right of setoff, recoupment, or counterclaim that the
Board might otherwise have against any owner or any other party and regardless of any contingency,
force majeure, event, or cause whatsoever and notwithstanding any circumstance or occurrence that
may arise or take place before, during, or after the issuance of Parity Obligations while any Parity
Obligations are Outstanding.
Section 3. COVENANTS RELATING TO PLEDGED REVENUES, (a) Rate
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Covenant. In each Fiscal Year, the Board shall establish, charge, and use its reasonable efforts to
collect at each Participant the Pledged Revenues which, if collected, would be sufficient to meet all
financial obligations of the Board for such Fiscal Year relating to the Financing System including
all deposits or payments due on or with respect to: (i) the Prior Encumbered Obligations; and (ii)
all Outstanding Parity Obligations.
(b) Tuition. Subject to the provisions of the resolutions authorizing Prior Encumbered
Obligations and to the other provisions of this Resolution, the Board covenants and agrees to fix,
levy, charge and collect at each Participant student tuition charges required or authorized by law to
be imposed on students enrolled at each Participant (excepting, with respect to each series or issue
of Parity Obligations, any student in a category which, at the time of adoption of a resolution relating
to such Parity Obligations, is exempt by law or by the Board from paying such tuition charges).
Each student (excluding those exempt from payment as provided above), enrolled at each
Participant, respectively, at each regular fall and spring semester and at each term of each summer
session, shall pay tuition charges in such amounts, without any limitation whatsoever, as will be
sufficient at all times, together with other legally available funds, including other Pledged Revenues,
to provide the money to make or pay the principal of, interest on, and other payments or deposits
with respect to Outstanding Parity Obligations when and as required. All changes in the tuition
charged students at each Participant shall be made by resolution of the Board, but such procedure
shall not constitute or be regarded as an amendment of this Resolution, but merely the carrying out
of the provisions and requirements hereof.
(c) Student Center Fees. Subject to the provisions of the resolution authorizing the
Series 2004 Bonds, the Board covenants and agrees to fix, levy, charge and collect student center
fees required or authorized by law to be imposed on students pursuant to Section 54.520 of the
Texas Education Code; provided however, that such student center fees shall be used only for the
purpose of acquiring, constructing, renovating, operating, maintaining, improving, equipping, and
financing a university center or additions to the center.
(d) Anticipated Deficit If the Board determines, for any reason whatsoever, that there
are not anticipated to be legally available funds, including Pledged Revenues, sufficient to meet all
financial obligations of the Board relating to the Financing System including the deposits and
payments due on or with respect to Outstanding Parity Obligations as the same mature or come due,
or that any Participant in the Financing System will be unable to pay its Annual Direct Obligation
in full, then the Board shall fix, levy, charge, and collect such rentals, rates, fees, tuition, or other
charges at each Participant in the Financing System with enrolled students, effective at the next
succeeding regular semester or semesters or summer term or terms, in such amounts, without any
limitation whatsoever (other than as provided in subsection (e) below), as will be at least sufficient
to provide, together with other legally available funds, including Pledged Revenues, the money for
making when due all financial obligations of the Board relating to the Financing System including
all payments and deposits due on or with respect to Outstanding Parity Obligations when and as
required by this Resolution.
(e) Economic Effect of Adjustments. Any adjustments in the rate or manner of
charging for any rentals, rates, fees, tuition, or other charges included in Pledged Revenues at any
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Participant in the Financing System resulting from an event described in subsection (d) above will
be based upon a certificate and recommendation of the Designated Financial Officer, delivered to
the Board, as to the rates and anticipated collection of the Pledged Revenues at each Participant in
the Financing System (after taking into account the anticipated effect the proposed adjustments in
such rentals, rates, fees, tuition, or other charges would have on enrollment and the receipt of
Pledged Revenues and other funds at each Participant in the Financing System) which will be
anticipated to result in: (i) Pledged Revenues attributable to each Participant being sufficient (to the
extent possible) to satisfy the Annual Obligation of such Participant; and (ii) Pledged Revenues
being sufficient, together with other legally available funds, to meet all financial obligations of the
Board relating to the Financing System including all deposits and payments due on or with respect
to: (A) the Prior Encumbered Obligations; and (B) all Outstanding Parity Obligations, when and as
required by this Resolution.
(f) Annual Obligation. If, in the judgment of the Board, any Participant in the Financing
System has been or will be unable to satisfy its Annual Obligation, the Board shall fix, levy, charge,
and collect rentals, rates, fees, and charges for goods and services furnished by such Participant and,
with respect to Participants with enrolled students, tuition, effective at the next succeeding regular
semester or semesters or summer term or terms, in amounts sufficient, without limit (subject to the
provisions of (e) above), together with other legally available funds, including other Pledged
Revenues attributable thereto, to enable it to make its Annual Obligation payments.
(g) Additional Participants. The Board hereby agrees to apply the covenants
hereinabove made to any institution, branch or entity hereinafter placed under the control and
governance of the Board and added as a Participant in the Financing System in accordance with the
provisions of Section 7 hereof.
Section 4. GENERAL COVENANTS. The Board further represents, covenants, and
agrees that while any Parity Obligations or interest thereon is Outstanding:
(a) Payment of Parity Obligations. On or before each payment date it shall make
available to the Paying Agent for such Parity Obligations or to such other party as required by the
resolution authorizing the sale of such Parity Obligations, money sufficient to pay the interest on,
principal of, and premium, if any, on the Parity Obligations as will accrue or otherwise come due
or mature, or be subject to mandatory redemption prior to maturity, on such date and the fees and
expenses related to the Parity Obligations, including the fees and expenses of the Paying Agent and
any Registrar, trustee, remarketing agent, tender agent, or Credit Provider.
(b) Performance. It will faithfully perform at all times any and all covenants,
undertakings, stipulations, and provisions contained in this Resolution, and in each and every Parity
Obligation or evidence thereof.
(c) Redemption. It will duly cause to be called for redemption prior to maturity, and
will cause to be redeemed prior to maturity, all Parity Obligations which by their terms are
mandatorily required to be redeemed prior to maturity, when and as so required.
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(d) Lawful Title. It lawfully owns, has title to, or is lawfully possessed of the lands,
buildings, and facilities now constituting the University, and it will defend said title and title to any
lands, buildings, and facilities which may hereafter become part of the Financing System, for the
benefit of the owners of Parity Obligations against the claims and demands of all persons
whomsoever.
(e) Lawful Authority. It is lawfully qualified to pledge the Pledged Revenues herein
pledged in the manner prescribed herein and has lawfully exercised such right.
(f) Preservation of Lien. Subject to the conditions set forth in Sections 5, 6, and 7 of
this Resolution, it will not do any act or thing whereby the Financing System might or could be
impaired, and that it will at all times maintain, preserve, and keep the real and tangible property of
the Financing System and every part thereof in good condition, repair, and working order and
operate, maintain, preserve, and keep the facilities, buildings, structures, and equipment pertaining
thereto in good condition, repair, and working order.
(g) No Additional Encumbrance. It shall not incur additional Debt secured by the
Pledged Revenues in any manner, except as permitted by this Resolution in connection with Parity
Obligations, unless said Debt is made junior and subordinate in all respects to the liens, pledges,
covenants, and agreements of this Resolution. Notwithstanding anything to the contrary contained
herein, and in addition to the right hereunder to refund the Prior Encumbered Obligations with Parity
Obligations, the Board reserves the right to issue obligations to refund any Prior Encumbered
Obligations and to secure the refunding obligations with the same source or sources securing the
Prior Encumbered Obligations being refunded. Upon the defeasance of the refunded Prior
Encumbered Obligations, the refunding obligations will be Prior Encumbered Obligations (unless
the refunding obligations are made Parity Obligations in accordance with the terms of this
Resolution and the resolution authorizing their issuance) under this Resolution for all purposes.
(h) Investments and Security. It will invest and secure money in all accounts and funds
established pursuant to this Resolution in the manner prescribed by law for such funds, including,
but not by way of limitation, the Public Funds Investment Act (Chapter 2256, Texas Government
Code), Chapter 163, Texas Property Code, and Section 51.0031, Texas Education Code, and in
accordance with written policies adopted by the Board.
(i) Records. It will keep proper books of record and account in which full, true, and
correct entries will be made of all dealings, activities, and transactions relating to the University.
Each year while Parity Obligations are Outstanding, the Board will prepare from such books of
record and account an annual financial report of the University and shall furnish such report to the
Authority, to the principal municipal bond rating agencies, and to any owner of Parity Obligations
who shall request same. In addition, the Board shall submit such financial report and other
information required by law for examination in connection with financial compliance and other
audits required to be conducted by the Office of the Auditor of the State of Texas.
(j) Inspection of Books. It will permit the Authority and any owner or owners of
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twenty-five percent (25%) or more of the then Outstanding Principal Amount at all reasonable times
to inspect all records, accounts, and data of the Board relating to the University and the Financing
System.
(k) Annual and Direct Obligations. In establishing the annual budget for each
Participant in the Financing System, it shall provide for the satisfaction by each Participant in the
Financing System of its Annual Obligation. The Direct Obligation shall represent the financial
responsibility of each Participant in the Financing System with respect to Outstanding Parity
Obligations. Each such Participant's Direct Obligation and Annual Obligation shall be evidenced
by a financing agreement between the Board and each Participant.
(1) Determination of Outstanding Parity Obligations. For all purposes of this
Resolution, the judgment of the chief financial officer of the University, presently the Vice President
for Business Affairs, shall be deemed final in the determination of which obligations of the Board
constitute Parity Obligations; provided, however, such judgment is subject to confirmation by the
Auditor of the State of Texas in connection with the annual audit of the records of the University.
(m) Execution of Credit Agreements, (i) For so long as the Authority possesses the
exclusive authority to issue bonds on behalf of the University, should the Board or the Authority
determine that it is in the best interests of the University to obtain a Credit Agreement to enhance
the security for or provide for the payment, redemption, or remarketing of Parity Obligations, the
Authority, upon approval of the Attorney General and approval and consent of the Board, may from
time to time and at any time to execute and deliver a Credit Agreement to which the Pledged
Revenues are to be pledged. The Authority agrees that it shall use reasonable efforts to negotiate
and deliver, on behalf of the University, a Credit Agreement containing terms and conditions
mutually acceptable to the Authority and the Board; provided, however, that prior to the Authority
adopting any resolution authorizing the execution and delivery of any such Credit Agreement, it
shall receive from the University an Officer's Certificate to the effect that: (a) the Board has
determined that the Participant for whom the Credit Agreement is to be executed and delivered
possesses the financial capability to satisfy its Direct Obligation after taking into account the
payment obligations under the proposed Credit Agreement; and (b) to the best of his or her
knowledge, the Board is in compliance with all covenants contained in this Resolution and any
resolution adopted authorizing the issuance of Parity Obligations, and is not in default in the
performance and observance of any of the terms, provisions, and conditions hereof or thereof.
(ii) The Board agrees to provide promptly to the Authority substantially final versions
of all documents pertaining to any "credit agreement" (as defined in Chapter 1371, Texas
Government Code), to which the Pledged Revenues are to be pledged, proposed to be executed and
delivered by the Board to enhance the security for or provide for the payment, redemption, or
remarketing of the Prior Encumbered Obligations. The Board further agrees that it shall give written
notice to the Authority no later than thirty (30) days prior to the date the Board considers for
approval any resolution authorizing the execution and delivery of any such credit agreement. The
lien on and pledge of Pledged Revenues to pay the cost of any such credit agreement may be on a
parity with, but not superior to, the lien on and pledge of the Pledged Revenues securing the Parity
Obligations.
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Section5. ISSUANCE OF ADDITIONAL OBLIGATIONS, (a) Parity Obligations.
The Board reserves and shall have the right and power to issue or incur, or request that the
Authority, on its behalf, issue or incur, Parity Obligations for any purpose authorized by law
pursuant to the provisions of this Resolution and the applicable laws of the State of Texas governing
the issuance of bonds for the benefit of the University. The Board, or the Authority acting on behalf
of the Board, may incur, assume, guarantee, or otherwise become liable in respect of any Parity
Obligations if the Board shall have determined that it will have sufficient funds to meet the financial
obligations of each Participant (currently the University) in the Financing System, including
sufficient Pledged Revenues to satisfy the Annual Debt Service Requirements of the Financing
System and to meet all financial obligations of the Board relating to the Financing System. In
addition, the Board shall not issue or incur Parity Obligations unless: (i) the Board shall determine
that the Participant for whom the Parity Obligations are being issued or incurred possesses the
financial capability to satisfy its Direct Obligation after taking into account the then proposed Parity
Obligations; and (ii) a Designated Financial Officer shall deliver to the Board and the Authority a
certificate stating that, to the best of his or her knowledge, the Board is in compliance with all
covenants contained in this Resolution and any resolution adopted authorizing the issuance of Parity
Obligations, and is not in default in the performance and observance of any of the terms, provisions,
and conditions hereof or thereof.
(b) Non-Recourse Debt and Subordinated Debt. Non-Recourse Debt and Subordinated
Debt may be incurred by the Board without limitation, subject to the applicable laws of the State of
Texas.
Section 6. DISPOSITION OF ASSETS ATTRIBUTABLE TO FINANCING
SYSTEM PARTICIPANTS. Except as otherwise may be required to preserve the tax exempt
status of the Bonds, the Board may convey, sell, or otherwise dispose of any properties of each
Participant (currently the University) in the Financing System provided:
(a) Ordinary Course. Such conveyance, sale, or disposition shall be in the ordinary
course of business of such Participant which uses, operates, owns, or is otherwise responsible for
such properties; or
(b) Disposition Upon Board Determination. The Board shall determine that after the
conveyance, sale, or other disposition of such properties, the Board shall have sufficient funds
during each Fiscal Year during which Parity Obligations are to be Outstanding to meet the financial
obligations of each Participant in the Financing System, including sufficient Pledged Revenues to
satisfy the Annual Debt Service Requirements of the Financing System and to meet all financial
obligations of the Board relating to the Financing System.
Section 7. COMBINATION, DIVISION, RELEASE AND ADMISSION OF NEW
INSTITUTIONS UNDER THE FINANCING SYSTEM, (a) Combination and Division.
Notwithstanding anything to the contrary contained herein, it is recognized that certain institutions
which may become Participants in the Financing System may be combined or divided and that so
long as such combined or divided institutions continue to be governed by the Board such action shall
not be in violation of the provisions of this Resolution or require any amendments of the provisions
F:\WDOX\CLIENTS\009425\00011M0074808.WPD / 3 9
hereof.
(b) Release. Subject to the conditions set forth below, any Participant in the Financing
System or portion thereof may be closed and abandoned by law or may be removed from the
Financing System (thus deleting the revenues, income, funds and balances attributable to said
Participant or portion thereof from Pledged Revenues) without violating the terms of this Resolution
provided:
(1) the Board approves and delivers to the Authority an Officers' Certificate to
the effect that, to the knowledge thereof, after the release of such Participant or portion
thereof, the Board will have sufficient funds during each Fiscal Year in which Parity
Obligations shall thereafter be Outstanding to meet the financial obligations of the Board,
including sufficient Pledged Revenues to satisfy the Annual Debt Service Requirements of
the Financing System and to meet all financial obligations of the Board relating to the
Financing System; and
(2) the Board and the Authority receive an Opinion of Counsel which shall state
that such release will not affect the status for federal income tax purposes of interest on any
Outstanding Parity Obligations and that all conditions precedent provided in this Resolution
or any resolution hereafter adopted governing the issuance of Parity Obligations relating to
such release have been complied with; and
(3) (A) if the Participant or portion thereof to be released from the Financing
System is to remain under the governance and control of the Board, the Board must either:
(i) provide, from lawfully available funds, including Pledged Revenues attributable to said
withdrawing Participant, for the payment or discharge of said Participant's Direct Obligation;
or (ii) pledge to the payment of Parity Obligation, additional resources not then pledged in
an amount sufficient to satisfy such withdrawing Participant's Direct Obligation; or
(B) if the Participant or portion thereof to be released from the Financing
System is to no longer be under the governance and control of the Board and remains in
operation independent of the Board, the Board must enter into a binding obligation with the
new governing body of the withdrawing institution or the portion thereof being withdrawn,
obligating said governing body to make payments to the Board at the times and in the
amounts equal to said Participant's Annual Obligation or to pay or discharge said
Participant's Direct Obligation, or, in the case of a portion of a Participant being withdrawn,
the proportion of the Participant's Annual Obligation or Direct Obligation, as the case may
be, attributable to the withdrawing portion of the Participant.
(c) If, after the date of the adoption of this Resolution, the Board desires for an institution
or agency governed by the Board to become a Participant of the Financing System, or if the Board
is required by law to assume the governance of an institution or agency, it may include said
institution or agency in the Financing System with the effect set forth in this Resolution by the
adoption of a resolution amending this Resolution, which resolution shall be binding upon the
Authority.
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Section 8. WAIVER OF CERTAIN COVENANTS. The Board may omit in any
particular instance to comply with any covenant or condition set forth in Sections 3 through 7 hereof
if before or after the time for such compliance the Holders of the same percentage in principal
amount of all Parity Obligations then Outstanding, the consent of which would be required to amend
the provisions hereof to permit such noncompliance, shall either waive such compliance in such
instance or generally waive compliance with such covenant or condition, but no such waiver shall
extend to or affect such covenant or condition except to the extent so expressly waived and, until
such waiver shall become effective, the obligations of the Board and the duties of the Board in
respect to any such covenant or condition shall remain in full force and effect. For purposes of this
Section, if a municipal bond insurance policy has been issued insuring the payment of any
Outstanding Parity Obligations, the term Holder shall mean the company that has issued any such
insurance policy or policies.
Section 9. AMOUNT, PURPOSE, AND DESIGNATION OF THE BONDS. The
"TEXAS PUBLIC FINANCE AUTHORITY STEPHEN F. AUSTIN STATE UNIVERSITY
REVENUE FINANCING SYSTEM REVENUE BONDS, SERIES 2005", are hereby authorized
to be issued and delivered in the aggregate principal amount of $ for the purpose of: (i)
constructing a new student residence hall and associated parking garage; and (ii) paying the costs
related to the issuance of the Bonds. The sale of the Bonds shall be effected by the Authority
pursuant to Section 1232.101 of the TPFA Act and Sections 55.13(c) and 55.17, Texas Education
Code. The adoption of this resolution by the Board shall be deemed to be a request by the Board
to the Authority to issue the Bonds for the purposes stated in this Section.
Section 10. DATE, DENOMINATIONS, NUMBERS, MATURITIES AND TERMS
OF BONDS, (a) Terms of Bonds. Initially there shall be issued, sold, and delivered hereunder
fully registered bonds, without interest coupons, numbered consecutively from R-l upward (except
the initial Bonds delivered to the Attorney General of the State of Texas which shall be numbered
from T-l upward), payable to the respective initial registered owners thereof, or to the registered
assignee or assignees of said bonds or any portion or portions thereof (in each case, the "Registered
Owner"), in the denominations of $5,000 or any integral multiples of $5,000 thereafter (an
"Authorized Denomination"), maturing serially or otherwise on the dates, in the years and in the
principal amounts, respectively, and dated, all as set forth in Schedule I attached to this Resolution.
The Bonds will be sold through a competitive bid sale, the terms of which will be approved by the
Authority on the date this Resolution is adopted by the Authority. The Designated Financial Officer
is authorized to execute Schedule I attached to this Resolution on behalf of the Board to
acknowledge the sale of the Bonds.
(b) Purchaser. The sale of the Bonds to the investment banking firm or firms named in
Schedule I attached to this Resolution (the "Purchaser") at the purchase price set forth therein, is
hereby authorized, ratified and confirmed. One Bond in the principal amount maturing on each
maturity date as set forth in Schedule I attached to this Resolution shall be delivered to the
Purchaser, and the Purchaser shall have the right to exchange such Bonds as provided in Section 12
hereof without cost. The Authority does hereby officially find, determine and declare that the Bonds
were sold to the highest bidder at terms that were the most advantageous reasonably obtained.
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(c) Offering Documents. The Official Notice of Sale and the Official Bid Form, together
with any addenda thereto, prepared and circulated with respect to the sale of the Bonds, are hereby
approved.
(d) Official Statement, (i) The preliminary official statement and the use thereof in the
solicitation of offers for the purchase of the Bonds is hereby approved and the preliminary official
statement is deemed final as of its date (pursuant to the Rule).
(ii) The Authority authorizes the preliminary official statement to be:
(A) supplemented to include such additional information and amendments as may
be necessary to confirm the official statement to the terms of the Bonds and this Resolution;
and
(B) modified if, in the opinion of Bond Counsel, such modification is necessary to
satisfy the disclosure requirements of the applicable federal securities laws.
(iii) Upon the final official statement being modified, if necessary, pursuant to clause (ii)
of this subsection (d), the final official statement, as so supplemented and modified, shall be deemed
to be approved by the Authority as the final official statement (for purposes of the Rule) for the
Bonds and an appropriate number of copies shall be delivered to the Purchaser for use in connection
with the offer and sale of the Bonds.
(e) Bond Proceeds; Deposit to Construction Fund. There is hereby created and
established a separate fund designated as the "Stephen F. Austin State University Series 2005
Bond Proceeds Construction Fund" (the "Construction Fund"). The Construction Fund shall be
held by the University with its depository bank or as otherwise directed by the University. Within
the Construction Fund there shall be established and maintained accounts designated as the
"Accrued Interest Account", the "Cost of Issuance Account" and the "Project Account",
respectively. Moneys deposited in the Construction Fund shall remain therein until from time to
time expended for the purposes described in this Resolution, and shall not be used for any other
purposes whatsoever, except as otherwise provided below, and pending such expenditure, moneys
in the Construction Fund may be invested at the direction of the Designated Financial Officer or the
designee thereof in eligible investments in accordance with the provisions of Section 4(h) of this
Resolution. Interest earnings shall accrue to the respective accounts in which moneys are held and
invested. The Authority shall cause such proceeds of the Bonds to be deposited to the credit of the
Construction Fund, in accordance with a letter of instructions which may be executed on behalf of
the Authority by its Executive Director, which letter shall designate the funds to be deposited to the
credit of the Accrued Interest Account, the Cost of Issuance Account and the Project Account;
provided, that only moneys representing accrued interest and premium, if any, received from the
proceeds of the Bonds shall be deposited to the credit of the Accrued Interest Account. The
University agrees that it shall pay those costs of issuance incurred in connection with the issuance
and delivery of the Bonds as are consistent with the approval of the issuance of the Bonds by the
Texas Bond Review Board and are approved in writing by the Authority, acting through its
F:\WDOX\CUENTS\009425\00011\10074808. WPD / 3 12
Executive Director. The University shall cause moneys on deposit in the Accrued Interest Account
to be used to pay debt service on the Bonds as the same shall become due and payable. The
University agrees to expend the moneys in the Project Account within the Construction Fund on
costs incurred in connection with the purposes described in Section 9 of this Resolution, consistent
with the provisions of Subchapter B, Chapter 55, Texas Education Code. Any amounts remaining
in the Project Account within the Construction Fund after the payment of all costs incurred in
connection with the purposes set out in clause (i) of Section 9 of this Resolution shall be used for
the payment of the principal of and interest on the Bonds as the same shall become due and payable.
The University shall provide to the Authority an Officer's Certificate, the form and substance of
which is described in the memorandum of understanding between the Authority and the Board
detailing the expenditure of bond proceeds. The Authority hereby finds that the deposit of the
proceeds from the sale of the Bonds in the manner outlined above is consistent with the conditions
surrounding the issuance of bonds previously issued directly by the University, and that the
procedure outlined above is adopted in accordance with Section 1232.101 of the TPFA Act.
(f) In General The Bonds: (i) may be assigned and transferred; (ii) may be exchanged
for other Bonds; (iii) shall have the characteristics; and (iv) shall be signed and sealed, and the
principal of and interest on the Bonds shall be payable, all as provided, and in the manner required
or indicated, in the FORM OF BONDS set forth in Exhibit B to this Resolution.
Section 11. INTEREST. The Bonds shall bear interest calculated on the basis of a 360-
day year composed of twelve 30-day months from the dates specified in the FORM OF BONDS set
forth in Exhibit B to this Resolution to their respective dates of maturity or redemption prior to
maturity at the rates set forth in Schedule I attached to this Resolution.
Section 12. REGISTRATION, TRANSFER, AND EXCHANGE;
AUTHENTICATION; BOOK-ENTRY-ONLY SYSTEM, (a) Paying Agent/Registrar. [Regions
Bank] is hereby appointed to act as the Paying Agent/Registrar for the Bonds. The Designated
Financial Officer is authorized to enter into and carry out a Paying Agent/Registrar Agreement with
the Paying Agent/Registrar with respect to the Bonds, a copy of which is attached to this Resolution.
(b) Registration Books. The Board shall keep or cause to be kept at the corporate trust
office of the Paying Agent/Registrar designated in the Paying Agent/Registrar Agreement (the
"Designated Trust Office") books or records for the registration of the transfer, exchange, and
replacement of the Bonds (the "Registration Books"), and the Paying Agent/Registrar is hereby
appointed to serve as registrar and transfer agent to keep such books or records and make such
registrations of transfers, exchanges, and replacements under such reasonable regulations as the
Board and Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make such
registrations, transfers, exchanges, and replacements as herein provided. The Paying
Agent/Registrar shall obtain and record in the Registration Books the address of the registered owner
of each Bond to which payments with respect to the Bonds shall be mailed, as herein provided; but
it shall be the duty of each registered owner to notify the Paying Agent/Registrar in writing of the
address to which payments shall be mailed, and such interest payments shall not be mailed unless
such notice has been given. The Authority and the Board each shall have the right to inspect the
Registration Books at the Designated Trust Office of the Paying Agent/Registrar during regular
F:\WDOX\CLIENTS\009425\00011U0074808.WPD / 3 13
business hours, but otherwise the Paying Agent/Registrar shall keep the Registration Books
confidential and, unless otherwise required by law, shall not permit their inspection by any other
entity.
(c) Ownership of Bonds. The entity in whose name any Bond shall be registered in the
Registration Books at any time shall be deemed and treated as the absolute owner thereof for all
purposes of this Resolution, whether such Bond shall be overdue, and, to the extent permitted by
law, the Authority, the Board and the Paying Agent/Registrar shall not be affected by any notice to
the contrary; and payment of, or on account of, the principal of, premium, if any, and interest on any
such Bond shall be made only to such registered owner. All such payments shall be valid and
effective to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so
paid.
(d) Payment of Bonds and Interest. The Paying Agent/Registrar shall further act as the
paying agent for paying the principal of, premium, if any, and interest on the Bonds, all as provided
in this Resolution. The Paying Agent/Registrar shall keep proper records of all payments made by
the University and the Paying Agent/Registrar with respect to the Bonds. Notwithstanding any other
provision of this Resolution to the contrary but to the extent permitted by law, the Authority, the
Board and the Paying Agent/Registrar shall be entitled to treat and consider the person in whose
name each Bond is registered in the Registration Books as the absolute owner of such Bond for the
purpose of payment of principal, premium, if any, and interest, with respect to such Bond, for the
purposes of registering transfers with respect to such Bond, and for all other purposes of registering
transfers with respect to such Bonds, and for all other purposes whatsoever. The Paying
Agent/Registrar shall pay all principal of, premium, if any, and interest on the Bonds only to or upon
the order of the respective owners, as shown in the Registration Books as provided in this
Resolution, or their respective attorneys duly authorized in writing, and all such payments shall be
valid and effective to fully satisfy and discharge the Board's obligations with respect to payment of
principal of, premium, if any, and interest on the Bonds to the extent of the sum or sums so paid.
No person other than an owner, as shown in the Registration Books, shall receive a Bond certificate
evidencing the obligation of the Board to make payments of principal, premium, if any, and interest
pursuant to this Resolution.
(e) Authentication. On the date of initial delivery of the Bonds, the initial bonds (the
"Initial Bonds") approved by the Attorney General, and registered and manually signed by the
Comptroller of Public Accounts, will be delivered to the Purchaser or its designee. Upon payment
for the Initial Bonds, the Paying Agent/Registrar shall cancel the Initial Bonds and deliver registered
definitive Bonds to DTC in accordance with Section 12(h). On each substitute Bond issued in
exchange for any Bond or Bonds issued under this Resolution the Paying Agent/Registrar shall
execute the PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE (the
"Authentication Certificate"). The Authentication Certificate shall be in the form set forth in the
FORM OF BONDS.
(f) Transfer, Exchange, or Replacement. Each Bond issued and delivered pursuant to
this Resolution, to the extent of the unpaid or unredeemed principal amount thereof, may, upon
surrender of such Bond at the Designated Trust Office of the Paying Agent/Registrar, together with
F:\WDOX\CLIENTS\009425\00011\10074808. WPD / 3 14
a written request therefor duly executed by the registered owner or the assignee or assignees thereof,
or its or their duly authorized attorneys or representatives, with guarantee of signatures satisfactory
to the Paying Agent/Registrar, may, at the option of the registered owner or such assignee or
assignees, as appropriate, be exchanged for fully registered bonds, without interest coupons, in the
appropriate form prescribed in the FORM OF BONDS set forth in this Resolution, in any
Authorized Denomination (subject to the requirement hereinafter stated that each substitute Bond
shall be of the same series and have a single stated maturity date), as requested in writing by such
registered owner or such assignee or assignees, in an aggregate principal amount equal to the unpaid
or unredeemed principal amount of any Bond or Bonds so surrendered, and payable to the
appropriate registered owner, assignee, or assignees, as the case may be. If a portion of any Bond
shall be redeemed prior to its scheduled maturity as provided herein, a substitute Bond or Bonds
having the same series designation and maturity date, bearing interest at the same rate, and payable
in the same manner, in Authorized Denominations at the request of the registered owner, and in an
aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered
owner upon surrender thereof for cancellation. If any Bond or portion thereof is assigned and
transferred, each Bond issued in exchange therefor shall have the same series designation and
maturity date and bear interest at the same rate and payable in the same manner as the Bond for
which it is being exchanged. Each substitute Bond shall bear a letter and/or number to distinguish
it from each other Bond. The Paying Agent/Registrar shall exchange or replace Bonds as provided
herein, and each fully registered bond delivered in exchange for or replacement of any Bond or
portion thereof as permitted or required by any provision of this Resolution shall constitute one of
the Bonds for all purposes of this Resolution, and may again be exchanged or replaced. On each
substitute Bond issued in exchange for or replacement of any Bond or Bonds issued under this
Resolution there shall be printed an Authentication Certificate, in the form set forth in the FORM
OF BONDS set forth in Exhibit B to this Resolution. An authorized representative of the Paying
Agent/Registrar shall, before the delivery of any such Bond, date and manually sign the
Authentication Certificate, and, except as provided in subsection (e) above, no such Bond shall be
deemed to be issued or outstanding unless the Authentication Certificate is so executed. The Paying
Agent/Registrar promptly shall cancel all Bonds surrendered for transfer, exchange, or replacement.
No additional orders or resolutions need be passed or adopted by the Board or any other body or
person so as to accomplish the foregoing transfer, exchange, or replacement of any Bond or portion
thereof, and the Paying Agent/Registrar shall provide for the printing, execution, and delivery of the
substitute Bonds in typed or printed form and in the manner prescribed herein. Pursuant to Chapter
1206, Texas Government Code, the duty of transfer, exchange, or replacement of Bonds as aforesaid
is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of the Authentication
Certificate, the exchanged or replaced Bond shall be valid, incontestable, and enforceable in the
same manner and with the same effect as the Bonds which were originally issued pursuant to this
Resolution. The Board shall pay the Paying Agent/Registrar's standard or customary fees and
charges, if any, for transferring, and exchanging any Bond or any portion thereof, but the one
requesting any such transfer and exchange shall pay any taxes or governmental charges required to
be paid with respect thereto as a condition precedent to the exercise of such privilege. The Paying
Agent/Registrar shall not be required to make any such transfer, exchange, or replacement of Bonds
or any portion thereof: (i) during the period commencing with the close of business on any Record
Date and ending with the opening of business on the next following interest payment date; or, (ii)
with respect to any Bond or portion thereof called for redemption prior to maturity, within 45 days
F:\WDOX\CLIENTS\009425\00011 \10074808.WPD / 3 15
prior to its redemption date. To the extent possible, any new Bond issued in an exchange,
replacement, or transfer of a Bond will be delivered to the registered owner or assignee of the
registered owner not more than three business days after the receipt of the Bonds to be cancelled and
the written request as described above.
(g) Substitute Paying Agent/Registrar. The Board covenants with the registered owners
of the Bonds that at all times while the Bonds are outstanding the Board will provide a competent
and legally qualified bank, trust company, financial institution, or other agency to act as and perform
the services of Paying Agent/Registrar for the Bonds under this Resolution, and that the Paying
Agent/Registrar will be one entity. The Board reserves the right to, and may, at its option, change
the Paying Agent/Registrar upon not less than 120 days written notice to the Paying Agent/Registrar,
to be effective not later than 60 days prior to the next principal or interest payment date after such
notice. In the event that the entity at any time acting as Paying Agent/Registrar (or its successor by
merger, acquisition, or other method) should resign or otherwise cease to act as such, the Board
covenants that promptly it will appoint a competent and legally qualified bank, trust company,
financial institution, or other agency to act as Paying Agent/Registrar under this Resolution. Upon
any change in the Paying Agent/Registrar, the previous Paying Agent/Registrar promptly shall
transfer and deliver the Registration Books (or a copy thereof), along with all other pertinent books
and records relating to the Bonds, to the new Paying Agent/Registrar designated and appointed by
the Board. Upon any change in the Paying Agent/Registrar, the Board promptly will cause a written
notice thereof to be sent by the new Paying Agent/Registrar to the Authority and to each registered
owner of the Bonds, by United States mail, first-class postage prepaid, which notice also shall give
the address of the new Paying Agent/Registrar. By accepting the position and performing as such,
each Paying Agent/Registrar shall be deemed to have agreed to the provisions of this Resolution,
and a certified copy of this Resolution shall be delivered to each Paying Agent/Registrar.
(h) Book-Entty-Only System. The Bonds issued in exchange for the Bonds initially
issued and delivered to the Purchaser shall be issued in the form of a separate single fully registered
Bond for each of the maturities thereof registered in the name of Cede & Co., as nominee of DTC,
and except as provided in subsection (i) hereof, all of the Outstanding Bonds shall be registered in
the name of Cede & Co., as nominee of DTC. The Authority heretofore has executed a MDTC
Blanket Letter of Representations" in connection with utilizing the DTC Book-Entry-Only System.
With respect to Bonds registered in the name of Cede & Co., as nominee of DTC, the
Authority, the Board and the Paying Agent/Registrar shall have no responsibility or obligation to
any DTC Participant or to any person on behalf of whom such a DTC Participant holds an interest
in the Bonds. Without limiting the immediately preceding sentence, the Authority, the Board and
the Paying Agent/Registrar shall have no responsibility or obligation with respect to: (i) the accuracy
of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest
in the Bonds; (ii) the delivery to any DTC Participant or any other person, other than a Bondholder,
as shown on the Registration Books, of any notice with respect to the Bonds, including any notice
of redemption; or (iii) the payment to any DTC Participant or any other person, other than a
Bondholder, as shown in the Registration Books of any amount with respect to principal of,
premium, if any, or interest on the Bonds. Notwithstanding any other provision of this Resolution
to the contrary but to the extent permitted by law, the Authority, the Board and the Paying
F:\WDOX\CLIENTS\009425\00011\10074808. WPD / 3 16
Agent/Registrar shall be entitled to treat and consider the person in whose name each Bond is
registered in the Registration Books as the absolute owner of such Bond for the purpose of payment
of principal, premium, if any, and interest, with respect to such Bond, for the purposes of registering
transfers with respect to such Bond, and for all other purposes of registering transfers with respect
to such Bonds, and for all other purposes whatsoever. The Paying Agent/Registrar shall pay all
principal of, premium, if any, and interest on the Bonds only to or upon the order of the respective
owners, as shown in the Registration Books as provided in this Resolution, or their respective
attorneys duly authorized in writing, and all such payments shall be valid and effective to fully
satisfy and discharge the Board's obligations with respect to payment of principal of, premium, if
any, and interest on the Bonds to the extent of the sum or sums so paid. No person other than an
owner, as shown in the Registration Books, shall receive a Bond certificate evidencing the obligation
of the Board to make payments of principal, premium, if any, and interest pursuant to this
Resolution. Upon delivery by DTC to the Paying Agent/Registrar of written notice to the effect that
DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the
provisions in this Resolution with respect to interest checks being mailed to the registered owner at
the close of business on the Record Date, the word "Cede & Co." in this Resolution shall refer to
such new nominee of DTC.
(i) Successor Securities Depository; Transfers Outside Book-Entry-Only System. In
the event that the Board or the Paying Agent/Registrar determines that DTC is incapable of
discharging its responsibilities described herein and in the representation letter of the Board to DTC
(as referred in subsection (h) above) or DTC determines to discontinue providing its services with
respect to the Bonds, the Board shall: (i) appoint a successor securities depository, qualified to act
as such under Section 17(a) of the Securities and Exchange Act of 1934, as amended, notify DTC
and DTC Participants of the appointment of such successor securities depository and transfer one
or more separate Bonds to such successor securities depository; or (ii) notify DTC and DTC
Participants of the availability through DTC of Bonds and transfer one or more separate Bonds to
DTC Participants having Bonds credited to their DTC accounts. In such event, the Bonds shall no
longer be restricted to being registered in the Registration Books in the name of Cede & Co., as
nominee of DTC, but may be registered in the name of the successor securities depository, or its
nominee, or in whatever name or names Bondholders transferring or exchanging Bonds shall
designate, in accordance with the provisions of this Resolution.
(j) Payments to Cede & Co. Notwithstanding any other provision of this Resolution to
the contrary, so long as any Bond is registered in the name of Cede & Co., as nominee of DTC, all
payments with respect to principal of, premium, if any, and interest on such Bond and all notices
with respect to such Bond shall be made and given, respectively, in the manner provided in the
representation letter of the Board to DTC.
(k) Notice of Redemption. In addition to the method of providing a notice of redemption
set forth in the FORM OF BONDS, the Paying Agent/Registrar shall give notice of redemption of
Bonds by United States mail, first-class postage prepaid, at least thirty (30) days prior to a
redemption date to each registered securities depository and to any national information service that
disseminates redemption notices. In addition, in the event of a redemption caused by an advance
refunding of the Bonds, the Paying Agent/Registrar shall send a second notice of redemption to the
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persons specified in the immediately preceding sentence at least thirty (30) days but not more than
ninety (90) days prior to the actual redemption date. Any notice sent to the registered securities
depositories or such national information services shall be sent so that they are received at least two
(2) days prior to the general mailing or publication date of such notice. The Paying Agent/Registrar
shall also send a notice of prepayment or redemption to the registered owner of any Bond who has
not sent the Bonds in for redemption sixty (60) days after the redemption date.
Each notice of redemption, whether required in the FORM OF BONDS or in this Section,
shall contain a description of the Bonds to be redeemed including the complete name of the Bonds,
the Series, the date of issue, the interest rate, the maturity date, the CUSIP number, a reference to
the principal amounts of each maturity called for redemption, the publication and mailing date for
the notice, the date of redemption, the redemption price, the name of the Paying Agent/Registrar and
the address at which the Bonds may be redeemed, including a contact person and telephone number.
All redemption payments made by the Paying Agent/Registrar to the registered owners of
the Bonds shall include a CUSIP number relating to each amount paid to such registered owner.
Section 13. FORM OF BONDS. The forms of the Bonds, including the form of the
Authentication Certificate, the form of Assignment, the form of any statement of insurance provided
by the municipal bond insurer in the event insurance is obtained on any of the Bonds, and the form
of Registration Certificate of the Comptroller of Public Accounts of the State of Texas, with respect
to the Bonds initially issued and delivered to the Purchaser pursuant to this Resolution, shall be,
respectively, substantially as set forth in Exhibit B. with such appropriate variations, omissions, or
insertions as are permitted or required by this Resolution.
Section 14. INDIVIDUALS NOT LIABLE. All covenants, stipulations, obligations,
and agreements of the Board contained in this Resolution shall be deemed to be covenants,
stipulations, obligations, and agreements of the Financing System and the Board to the full extent
authorized or permitted by the Constitution and laws of the State of Texas. The Authority agrees
that all covenants, stipulations, obligations, and agreements of the Board contained in this
Resolution shall apply equally to the Authority acting in its capacity as the issuer of the Bonds on
behalf of the University. No covenant, stipulation, obligation, or agreement herein contained shall
be deemed to be a covenant, stipulation, obligation, or agreement of any member of either the
Authority or the Board or agent or employee of either the Authority or the Board in the individual
capacity thereof and neither the respective members of the Authority or the Board, nor any officer
thereof or of any participant shall be liable personally on Parity Obligations when issued, or be
subject to any personal liability or accountability by reason of the issuance thereof.
Section 15. SECURITY FOR THE BONDS. The Bonds are special obligations of the
Board payable from and secured solely by the Pledged Revenues pursuant to this Resolution. The
Pledged Revenues are hereby pledged, subject to the liens securing the Prior Encumbered
Obligations, to the payment of the principal of, premium, if any, and interest on the Bonds as the
same shall become due and payable. The Board agrees to pay the principal of, premium, if any, and
the interest on the Bonds when due, whether by reason of maturity or redemption.
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Section 16. PAYMENTS. Semiannually on or before each principal or interest payment
date while any of the Bonds are outstanding and unpaid, commencing on the first interest payment
date for the Bonds as provided in Schedule I attached to this Resolution, the Board shall make
available to the Paying Agent/Registrar, money sufficient to pay such interest on and such principal
of the Bonds as will accrue or mature, or be subject to mandatory redemption prior to maturity, on
such principal, redemption, or interest payment date. The Paying Agent/Registrar shall cancel all
paid Bonds and shall furnish the Board with an appropriate certificate of cancellation.
Section 17. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED
BONDS, (a) Replacement Bonds. In the event any outstanding Bond is damaged, mutilated, lost,
stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered,
a new bond of the same Series, principal amount, maturity, and interest rate, and in the same form,
as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement for such Bond in the
manner hereinafter provided.
(b) Application for Replacement Bonds. Application for replacement of damaged,
mutilated, lost, stolen, or destroyed Bonds shall be made to the Paying Agent/Registrar. In every
case of loss, theft, or destruction of a Bond, the applicant for a replacement bond shall furnish to the
Authority, the Board and the Paying Agent/Registrar such security or indemnity as may be required
by them to save each of them harmless from any loss or damage with respect thereto. Also, in every
case of loss, theft, or destruction of a Bond, the applicant shall furnish to the Authority, the Board
and the Paying Agent/Registrar evidence to their satisfaction of the loss, theft, or destruction of such
Bond, as the case may be. In every case of damage or mutilation of a Bond, the applicant shall
surrender to the Paying Agent/Registrar for cancellation the Bond so damaged or mutilated.
(c) Payment in Lieu of Replacement. Notwithstanding the foregoing provisions of this
Section, in the event any such Bond shall have matured, and no default has occurred which is then
continuing in the payment of the principal of, redemption premium, if any, or interest on the Bond,
the Board, or the Authority acting on behalf of the Board, may authorize the payment of the same
(without surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a
replacement Bond, provided security or indemnity is furnished as above provided in this Section.
(d) Charge for Issuing Replacement Bonds. Prior to the issuance of any replacement
bond, the Paying Agent/Registrar shall charge the owner of such Bond with all legal, printing, and
other expenses in connection therewith. Every replacement bond issued pursuant to the provisions
of this Section by virtue of the fact that any Bond is lost, stolen, or destroyed shall constitute a
contractual obligation of the Board whether or not the lost, stolen, or destroyed Bond shall be found
at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Resolution
equally and proportionately with any and all other Bonds duly issued under this Resolution.
(e) Authority for Issuing Replacement Bonds. In accordance with Chapter 1206, Texas
Government Code, this Section shall constitute authority for the issuance of any such replacement
bond without the necessity of further action by the Authority, the Board or any other body or person,
and the duty of the replacement of such Bonds is hereby authorized and imposed upon the Paying
Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such Bonds in the
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form and manner and with the effect, as provided in Section 12(f) of this Resolution for Bonds
issued in exchange and replacement for other Bonds.
Section 18. REMEDIES. Any owner of Parity Obligations in the event of default in
connection with any covenant contained herein or in any resolution adopted hereafter authorizing
the issuance of Parity Obligations, or default in the payment of said obligations, or of any interest
due thereon, or other costs and expenses related thereto, may require the Authority, the Board, their
respective officials and employees, and any appropriate official of the State of Texas, to carry out,
respect, or enforce the covenants and obligations of this Resolution by all legal and equitable means,
including specifically, but without limitation, the use and filing of mandamus proceedings in any
court of competent jurisdiction against the Authority, the Board, their respective officials and
employees, or any appropriate official of the State of Texas. Any delay or omission to exercise any
right or power accruing upon any default shall not impair any such right or power nor be construed
to be a waiver of any such default or acquiescence therein, and every such right and power may be
exercised from time to time and as often as may be deemed expedient. Acceleration of the
maturities of the Bonds shall not be an available remedy.
Section 19. DEFEASANCE OF OBLIGATIONS, (a) Any Bond and the interest
thereon shall be deemed to be paid, retired and no longer Outstanding (a "Defeased Bond") within
the meaning of this Resolution, except to the extent provided in subsections (c) and (e) of this
Section, when payment of the principal of such Bond, plus interest thereon to the due date or dates
(whether such due date or dates be by reason of maturity, upon redemption, or otherwise) either: (i)
shall have been made or caused to be made in accordance with the terms thereof (including the
giving of any required notice of redemption); or (ii) shall have been provided for on or before such
due date by irrevocably depositing with or making available to the Paying Agent/Registrar for such
payment: (1) lawful money of the United States of America sufficient to make such payment; (2)
Defeasance Securities, certified by an independent public accounting firm of national reputation to
mature as to principal and interest in such amounts and at such times as will ensure the availability,
without reinvestment, of sufficient money to provide for such payment and when proper
arrangements have been made by the Authority with the Paying Agent/Registrar for the payment of
its services until all Defeased Bonds shall have become due and payable; or (3) any combination of
(1) and (2). At such time as a Bond shall be deemed to be a Defeased Bond hereunder, as aforesaid,
such Bond and the interest thereon shall no longer be secured by, payable from, or entitled to the
benefits of, the revenues herein pledged as provided in this Resolution, and such principal and
interest shall be payable solely from such money or Defeasance Securities.
(b) The deposit under clause (ii) of subsection (a) shall be deemed a payment of a Bond
as aforesaid when proper notice of redemption of such Bonds shall have been given, in accordance
with this Resolution. Any money so deposited with the Paying Agent/Registrar as provided in this
Section may at the written discretion of the Authority also be invested in Defeasance Securities,
maturing in the amounts and at the times as hereinbefore set forth, and all income from all
Defeasance Securities in possession of the Paying Agent/Registrar pursuant to this Section which
is not required for the payment of such Bond and premium, if any, and interest thereon with respect
to which such money has been so deposited, shall be turned over to the Authority.
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(c) Notwithstanding any provision of any other Section of this Resolution which may
be contrary to the provisions of this Section, all money or Defeasance Securities set aside and held
in trust pursuant to the provisions of this Section for the payment of principal of the Bonds and
premium, if any, and interest thereon, shall be applied to and used solely for the payment of the
particular Bonds and premium, if any, and interest thereon, with respect to which such money or
Defeasance Securities have been so set aside in trust. Until all Defeased Bonds shall have become
due and payable, the Paying Agent/Registrar shall perform the services of Paying Agent/Registrar
for such Defeased Bonds the same as if they had not been defeased, and the Authority shall make
proper arrangements to provide and pay for such services as required by this Resolution.
(d) Notwithstanding anything elsewhere in this Resolution, if money or Defeasance
Securities have been deposited or set aside with the Paying Agent/Registrar pursuant to this Section
for the payment of Bonds and such Bonds shall not have in fact been actually paid in full, no
amendment of the provisions of this Section shall be made without the consent of the registered
owner of each Bond affected thereby.
(e) Notwithstanding the provisions of subsection (a) immediately above, to the extent
that, upon the defeasance of any Defeased Bond to be paid at its maturity, the Authority retains the
right under Texas law to later call that Defeased Bond for redemption in accordance with the
provisions of the resolution authorizing its issuance, the Authority may call such Defeased Bond for
redemption upon complying with the provisions of Texas law and upon the satisfaction of the
provisions of subsection (a) immediately above with respect to such Defeased Bond as though it was
being defeased at the time of the exercise of the option to redeem the Defeased Bond and the effect
of the redemption is taken into account in determining the sufficiency of the provisions made for the
payment of the Defeased Bond.
(f) In the event that the Authority elects to defease less than all of the principal amount
of Bonds of a maturity, the Paying Agent/Registrar shall select, or cause to be selected, such amount
of Bonds by such random method as it deems fair and appropriate.
Section 20. AMENDMENT OF RESOLUTION, (a) Amendment Without Consent.
This Resolution and the rights and obligations of the Authority, the Board and of the owners of the
Outstanding Parity Obligations may be modified or amended at any time without notice to or the
consent of any owner of the Outstanding Parity Obligations, solely for any one or more of the
following purposes:
(i) To add to the covenants and agreements of the Board or the Authority
contained in this Resolution, other covenants and agreements thereafter to be observed, or
to surrender any right or power reserved to or conferred upon the Board or the Authority in
this Resolution;
(ii) To cure any ambiguity or inconsistency, or to cure or correct any defective
provisions contained in this Resolution, upon receipt by the Board and the Authority of an
opinion of Bond Counsel, that the same is needed for such purpose, and will more clearly
express the intent of this Resolution;
F:\WDOX\CLIENTS\009425\00011U0074808.WPD / 3 21
(iii) To supplement the security for the Parity Obligations, including, but not by
way of limitation, to provide for the addition of new institutions and agencies to the
Financing System or to clarify the provisions regarding the University as a Participant in the
Financing System; provided, however, if the definition of Pledged Revenues is amended in
any manner which results in the pledge of additional resources, the terms of such amendment
may limit the amount of such additional pledge and the manner, extent, and duration of such
additional pledge all as set forth in such amendment;
(iv) To make any changes or amendments requested by any bond rating agency
then rating or requested to rate Parity Obligations, as a condition to the issuance or
maintenance of a rating, which changes or amendments do not, in the judgment of the Board
and the Authority, materially adversely affect the interests of the owners of the Outstanding
Parity Obligations;
(v) To make such changes, modifications or amendments as may be necessary
or desirable, which shall not adversely affect the interests of the owners of the Outstanding
Parity Obligations, in order, to the extent permitted by law, to facilitate the economic and
practical utilization of Credit Agreements with respect to the Parity Obligations;
(vi) To make such other changes in the provisions hereof as the Board and the
Authority may deem necessary or desirable and which shall not, in the judgment of the
Board and the Authority, materially adversely affect the interests of the owners of
Outstanding Parity Obligations; or
(vii) To make such changes or amendments as contemplated by Section 24(c)(v)
of this Resolution in order to comply with the Rule.
Notice of any such amendment may be published by the Board in the manner described in subsection
(c) of this Section; provided, however, that the publication of such notice shall not constitute a
condition precedent to the adoption of such amendatory resolution and the failure to publish such
notice shall not adversely affect the implementation of such amendment as adopted pursuant to such
amendatory resolution.
(b) Amendments With Consent. Subject to the other provisions of this Resolution, the
owners of Outstanding Parity Obligations aggregating a majority in Outstanding Principal Amount
shall have the right from time to time to approve any amendment to this Resolution, other than
amendments described in subsection (a) of this Section, which may be deemed necessary or
desirable by the Board and the Authority; provided, however, that nothing herein contained shall
permit or be construed to permit, without the approval of the owners of all of the Outstanding Parity
Obligations, the amendment of the terms and conditions in this Resolution so as to:
(1) Grant to the owners of any Outstanding Parity Obligations a priority over the owners
of any other Outstanding Parity Obligations;
(2) Materially adversely affect the rights of the owners of less than all Parity Obligations
F:\WDOX\CLIENTS\009425\0001 l\10074808.WPD / 3 22
then Outstanding;
(3) Change the minimum percentage of the Outstanding Principal Amount necessary for
consent to such amendment;
(4) Make any change in the maturity of the Outstanding Bonds;
(5) Reduce the rate of interest borne by Outstanding Bonds;
(6) Reduce the amount of the principal payable on Outstanding Bonds;
(7) Modify the terms of payment of principal of or interest on the Outstanding Bonds,
or impose any conditions with respect to such payment; or
(8) Adversely affect the tax exempt status of the interest on the Outstanding Bonds to
the owners thereof.
(c) Notice. If at any time this Resolution is to be amended pursuant to the provisions of
subsection (b) of this Section, the Board shall cause notice of the proposed amendment to be
published in a financial newspaper or journal of general circulation in The City of New York, New
York, once during each calendar week for at least two successive calendar weeks. Such notice shall
briefly set forth the nature of the proposed amendment and shall state that a copy thereof is on file
at the principal office of each Registrar for the Parity Obligations for inspection by all owners of
Parity Obligations. Such publication is not required, however, if the Board gives or causes to be
given such notice in writing, by certified mail, to each owner of Parity Obligations. Such
publication is not required with respect to amendments to this Resolution effected pursuant to the
provisions of subsection (a) of this Section.
(d) Receipt of Consents. Whenever at any time not less than thirty (30) days, and within
one year, from the date of the first publication of said notice or other service of written notice of the
proposed amendment the Board shall receive an instrument or instruments executed by all of the
owners or the owners of at least a majority in Outstanding Principal Amount, as appropriate, which
instrument or instruments shall refer to the proposed amendment described in said notice and which
specifically consent to and approve such amendment in substantially the form of the copy thereof
on file as aforesaid, the Board may adopt the amendatory resolution in substantially the same form.
(e) Effect of Amendments. Upon the adoption of any resolution to amend this
Resolution pursuant to the provisions of this Section, this Resolution shall be deemed to be amended
in accordance with the amendatory resolution, and the respective rights, duties, and obligations of
the Board, the Authority and all the owners of then Outstanding Parity Obligations and all future
Parity Obligations shall thereafter be determined, exercised, and enforced under this Resolution, as
amended.
(f) Consent Irrevocable. Any consent given by any owner of Parity Obligations
pursuant to the provisions of this Section shall be irrevocable for a period of six months from the
F:\WDOX\CLIENTS\009425\00011\10074808. WPD / 3 23
date of the first publication or other service of the notice provided for in this Section, and shall be
conclusive and binding upon all future owners of the same Parity Obligations during such period.
Such consent may be revoked at any time after six months from the date of the first publication of
such notice by the owner who gave such consent, or by a successor in title, by filing notice thereof
with the Registrar for such Parity Obligations, the Authority and the Board, but such revocation shall
not be effective if the owners of a majority in Outstanding Principal Amount, prior to the attempted
revocation, consented to and approved the amendment.
(g) Ownership. For the purpose of this Section, the ownership and other matters relating
to all Parity Obligations shall be determined by the Registration Books maintained by the Registrar.
Section 21. COVENANTS REGARDING TAX-EXEMPTION, (a) Covenants. The
Board and the Authority covenant to take any action necessary to assure, or refrain from any action
which would adversely affect, the treatment of the Bonds as obligations described in section 103 of
the Code, the interest on which is not includable in the "gross income" of the holder for purposes
of federal income taxation. The Authority understands, and the Board agrees, that all costs
associated with satisfying the below covenants including, but not by way of limitation, the costs
incurred in respect to compliance with clause (8) below, shall be borne by the Board. In furtherance
thereof, the Board and the Authority covenant as follows:
(1) to take any action to assure that no more than 10 percent of the proceeds of
the Bonds or the projects financed therewith (less amounts deposited to a reserve fund, if
any) are used for any "private business use," as defined in section 141(b)(6) of the Code or,
if more than 10 percent of the proceeds or the projects financed therewith are so used, such
amounts, whether or not received by the Board, with respect to such private business use,
do not, under the terms of this Resolution or any underlying arrangement, directly or
indirectly, secure or provide for the payment of more than 10 percent of the debt service on
the Bonds, in contravention of section 141(b)(2) of the Code;
(2) to take any action to assure that in the event that the "private business use"
described in subsection (1) hereof exceeds 5 percent of the proceeds of the Bonds or the
projects financed therewith (less amounts deposited into a reserve fund, if any) then the
amount in excess of 5 percent is used for a "private business use" which is "related" and not
"disproportionate," within the meaning of section 141 (b)(3) of the Code, to the governmental
use;
(3) to take any action to assure that no amount which is greater than the lesser
of $5,000,000, or 5 percent of the proceeds of the Bonds (less amounts deposited into a
reserve fluid, if any) is directly or indirectly used to finance loans to persons, other than state
or local governmental units, in contravention of section 141(c) of the Code;
(4) to refrain from taking any action which would otherwise result in the Bonds
being treated as "private activity bonds" within the meaning of section 141 (b) of the Code;
(5) to refrain from taking any action that would result in the Bonds being
F:\WDOX\CLIENTS\009425\00011\10074808.WPD / 3 24
"federally guaranteed" within the meaning of section 149(b) of the Code;
(6) to refrain from using any portion of the proceeds of the Bonds, directly or
indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire
investment property (as defined in section 148(b)(2) of the Code) which produces a
materially higher yield over the term of the Bonds, other than investment property acquired
with-
(A) proceeds of the Bonds invested for a reasonable temporary period of
3 years or less or, in the case of a refunding bond, for a period of 30 days or less until
such proceeds are needed for the purpose for which the Bonds are issued,
(B) amounts invested in a bona fide debt service fund, within the meaning
of section 1.148-l(b) of the Treasury Regulations, and
(C) amounts deposited in any reasonably required reserve or replacement
fund to the extent such amounts do not exceed 10 percent of the proceeds of the
Bonds;
(7) to otherwise restrict the use of the proceeds of the Bonds or amounts treated
as proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwise
contravene the requirements of section 148 of the Code (relating to arbitrage) and, to the
extent applicable, section 149(d) of the Code (relating to advance refundings); and
(8) to pay to the United States of America at least once during each five-year
period (beginning on the date of delivery of the Bonds) an amount that is at least equal to 90
percent of the "Excess Earnings," within the meaning of section 148(f) of the Code and to
pay to the United States of America, not later than 60 days after the Bonds have been paid
in full, 100 percent of the amount then required to be paid as a result of Excess Earnings
under section 148(f) of the Code.
(b) Rebate Fund. In order to facilitate compliance with the above covenant (8), a
"Rebate Fund" is hereby established by the Board for the sole benefit of the United States of
America, and such fund shall not be subject to the claim of any other person, including without
limitation the registered owners of the Bonds. The Rebate Fund is established for the additional
purpose of compliance with section 148 of the Code. The Rebate Fund shall be maintained and
administered at the direction of the Board.
(c) Proceeds. The Board understands that the term "proceeds" includes "disposition
proceeds" as defined in the Treasury Regulations and, in the case of refunding bonds, transferred
proceeds (if any) and proceeds of the refunded bonds expended prior to the date of issuance of the
Bonds. It is the understanding of the Board that the covenants contained herein are intended to
assure compliance with the Code and any regulations or rulings promulgated by the U.S. Department
of the Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated
which modify or expand provisions of the Code, as applicable to the Bonds, the Board will not be
F:\WDOX\CLIENTS\009425\00011\10074808.WPD / 3 25
required to comply with any covenant contained herein to the extent that such failure to comply, in
the opinion of nationally recognized bond counsel, will not adversely affect the exemption from
federal income taxation of interest on the Bonds under section 103 of the Code. In the event that
regulations or rulings are hereafter promulgated which impose additional requirements which are
applicable to the Bonds, the Board agrees to comply with the additional requirements to the extent
necessary, in the opinion of nationally recognized bond counsel, to preserve the exemption from
federal income taxation of interest on the Bonds under section 103 of the Code. In furtherance of
the foregoing, the Chair of the Board, the Chair of the Authority, the Executive Director of the
Authority, and the Designated Financial Officer each may execute any documents, certificates or
reports required by the Code and to make such elections, on behalf of the Board, which may be
permitted by the Code as are consistent with the purpose for the issuance of the Bonds.
(d) Allocation Of, and Limitation On, Expenditures for the Project. The Board
covenants to account for on its books and records the expenditure of proceeds from the sale of the
Bonds and any investment earnings thereon to be used for the purposes described in Section 9 of this
Resolution (the "Project") in accordance with the requirements of the Code. The Board recognizes
that in order for the proceeds to be considered used for the reimbursement of costs, the proceeds
must be allocated to expenditures within 18 months of the later of the date that: (1) the expenditure
on a Project is made; or (2) each such Project is completed; but in no event later than three years
after the date on which the original expenditure is paid. The foregoing notwithstanding, the Board
recognizes that in order for proceeds to be expended under the Code, the sale proceeds or investment
earnings must be expended no more than 60 days after the earlier of: (1) the fifth anniversary of the
date of delivery of the Bonds; or (2) the date the Bonds are retired. The Board agrees to obtain the
advise of nationally-recognized bond counsel if such expenditure fails to comply with the foregoing
to assure that such expenditure will not adversely affect the tax-exempt status of the Bonds. For
purposes of this subsection, the Board shall not be obligated to comply with this covenant if it
obtains an opinion of nationally-recognized bond counsel to the effect that such failure to comply
will not adversely affect the excludability for federal income tax purposes from gross income of the
interest. The Board shall notify the Authority in writing promptly after it receives or is made aware
of any such opinion.
(e) Disposition of Project. The Board covenants that the property constituting a Project
will not be sold or otherwise disposed in a transaction resulting in the receipt by the Board of cash
or other compensation, unless the Board obtains an opinion of nationally-recognized bond counsel
substantially to the effect that such sale or other disposition will not adversely affect the tax-exempt
status of the Bonds. For purposes of this subsection, the Board shall not be obligated to comply with
this covenant if it obtains an opinion of nationally-recognized bond counsel to the effect that such
failure to comply will not adversely affect the excludability for federal income tax purposes from
gross income of the interest. The Board shall notify the Authority in writing promptly after it
receives or is made aware of any such opinion.
Section 22. PRIOR REDEMPTION, (a) Optional Redemption. The Bonds maturing
on and after October 15, 2016 are subject to redemption prior to maturity, at the option of the
Authority, on October 15, 2015 or any date thereafter, in whole or in part (but if less than all the
Bonds of a single maturity are called for redemption, those bonds called shall be selected by lot or
F:\WDOX\CLIENTS\009425\00011\10074808. WPD / 3 26
other customary random method by the Paying Agent/Registrar), for a redemption price equal to the
principal amount to be redeemed plus accrued interest to the date fixed for redemption.
(b) Mandatory Sinking Fund Redemption. The Bonds maturing on October 15, 20
and October 15,20 (the "Term Bonds") are subject to mandatory sinking fund redemption prior
to their scheduled maturity, and will be redeemed by the Authority, in part at a redemption price
equal to the principal amount to be redeemed plus accrued interest from the most recent interest
payment date to the date of redemption, on the date and in the principal amounts shown in the
following schedule:
Term Bonds Maturing October 15, 20
Redemption Date Principal Amount
October 15,20
October 15,20
October 15, 20 *
*Final Maturity
Term Bonds Maturing October 15, 20_
Redemption Date Principal Amount
October 15, 20
October 15,20
October 15, 20 *
*Final Maturity
Section 23. OTHER REPRESENTATION AND COVENANTS. The Authority and
the Board further covenant or warrant as follows:
(a) The Authority is a duly organized and existing political subdivision of the State of
Texas under the Constitution and laws of the State of Texas.
(b) The Authority is duly authorized under the laws of the State of Texas to issue the
Bonds; all action on its part of the creation and issuance of the Bonds has been duly and effectively
F:\WDOX\CLIENTS\009425\00011\10074808.WPD / 3 27
taken; and the Bonds in the hands of the Holders thereof are and will be valid and enforceable
obligations of the Authority in accordance with their terms.
(c) The Bonds upon issuance and approval by the Attorney General of the State of Texas
will be legal, valid and binding obligations of the Authority, subject to bankruptcy, insolvency, or
other laws affecting creditors; rights generally and as may be affected by matters involving the
exercise of equitable or judicial discretion.
(d) The Bonds and Bond documents do not conflict with other agreements or obligations
binding on the University.
(e) No litigation is pending that would adversely affect the financial condition of the
Authority, and no litigation of any nature has been filed or is now pending to restrain or enjoin the
issuance or delivery of the Bonds, that would affect the provisions made for the payment or security
of the Bonds, or that in any manner questions the proceedings or authority concerning the issuance
of the Bonds.
(f) There has been no default or non-appropriation of any obligations of the Authority.
Section 24. CONTINUING DISCLOSURE, (a) Annual Reports, (i) The Board shall
provide annually to each NRMSIR and any SID, within six months after the end of each fiscal year
ending in or after 2005, financial information and operating data of the general type included in the
final Official Statement authorized by Section 10 hereof, being the information described in
Exhibit C hereto. Any financial statements so to be provided shall be prepared in accordance with
the accounting principles described in Exhibit C hereto, or such other accounting principles as the
Board may be required to employ from time to time pursuant to state law or regulation. If the Board
commissions an audit of such statements and the audit is completed within the period during which
they must be provided, a copy of such audit also shall be provided in accordance with the Rule. If
any such audit commissioned by the Board of such financial statements is not complete within such
period, then the Board shall provide unaudited financial statements and audited financial statements
for the applicable fiscal year to each NRMSIR and any SID, when and if the audit report on such
statements become available.
(ii) If the Board changes the fiscal year of the University, it will notify each NRMSIR and
any SID of the change (and of the date of the new fiscal year end) prior to the next date by which
the Board otherwise would be required to provide financial information and operating data pursuant
to this Section. The financial information and operating data to be provided pursuant to this Section
may be set forth in full in one or more documents or may be included by specific reference to any
document (including an official statement or other offering document, if it is available from the
MSRB) that theretofore has been provided to each NRMSIR and any SID or filed with the SEC.
(b) Material Event Notices. The Board shall notify any SID and either each NRMSIR or
the MSRB, in a timely manner, of any of the following events with respect to the Bonds, if such
event is material within the meaning of the federal securities laws:
F:\WDOX\CLIENTS\009425\00011\10074808. WPD / 3 28
1. Principal and interest payment delinquencies;
2. Non-payment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds;
7. Modifications to rights of holders of the Bonds;
8. Bond calls;
9. Defeasances;
10. Release, substitution, or sale of property securing repayment of the Bonds;
and
11. Rating changes.
The Board shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any
failure by the Board to provide financial information or operating data in accordance with subsection
(a) of this Section by the time required by such subsection.
(c) Limitations, Disclaimers, and Amendments, (i) The Board shall be obligated to
observe and perform the covenants specified in this Section for so long as, but only for so long as,
the Board remains an "obligated person" with respect to the Bonds within the meaning of the Rule,
except that the Board in any event will give notice of any deposit made in accordance with this
Resolution or applicable law that causes the Bonds no longer to be Outstanding.
(ii) The provisions of this Section are for the sole benefit of the registered owners and
beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any
benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The Board
undertakes to provide only the financial information, operating data, financial statements, and
notices which it has expressly agreed to provide pursuant to this Section and does not hereby
undertake to provide any other information that may be relevant or material to a complete
presentation of the Board's financial results, condition, or prospects or hereby undertake to update
any information provided in accordance with this Section or otherwise, except as expressly provided
herein. The Board does not make any representation or warranty concerning such information or
its usefulness to a decision to invest in or sell Bonds at any future date.
(iii) UNDER NO CIRCUMSTANCES SHALL THE BOARD BE LIABLE TO THE
REGISTERED OWNER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER
PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART
FROM ANY BREACH BY THE BOARD WHETHER NEGLIGENT OR WITHOUT FAULT ON
ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND
REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF
ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR
SPECIFIC PERFORMANCE.
(iv) No default by the Board in observing or performing its obligations under this Section
shall comprise a breach of or default under the Resolution for purposes of any other provision of this
F:\WDOX\CLIENTS\009425\00011U0074808.WPD / 3 29
Resolution. Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit
the duties of the Board under federal and state securities laws.
(v) The provisions of this Section may be amended by the Board from time to time to adapt
to changed circumstances that arise from a change in legal requirements, a change in law, or a
change in the identity, nature, status, or type of operations of the Board, but only if: (1) the
provisions of this Section, as so amended, would have permitted an underwriter to purchase or sell
Bonds in the primary offering of the Bonds in compliance with the Rule, taking into account any
amendments or interpretations of the Rule since such offering as well as such changed circumstances
and; (2) either: (A) the registered owners of a majority in aggregate principal amount (or any greater
amount required by any other provision of this Resolution that authorizes such an amendment) of
the Outstanding Bonds consent to such amendment; or (B) a person that is unaffiliated with the
Board (such as nationally recognized bond counsel) determined that such amendment will not
materially impair the interest of the registered owners and beneficial owners of the Bonds. If the
Board so amends the provisions of this Section, it shall include with any amended financial
information or operating data next provided in accordance with subsection (a) of this Section an
explanation, in narrative form, of the reason for the amendment and of the impact of any change in
the type of financial information or operating data so provided. The Board may also amend or repeal
the provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable
provision of the Rule or a court of final jurisdiction enters judgment that such provisions of the Rule
are invalid, but only if and to the extent that the provisions of this sentence would not prevent an
underwriter from lawfully purchasing or selling Bonds in the primary offering of the Bonds.
Section 25. RESOLUTION TO CONSTITUTE A CONTRACT; EQUAL
SECURITY. In consideration of the acceptance of the Bonds, the issuance of which is authorized
hereunder, by those who shall hold the same from time to time, this Resolution shall be deemed to
be and shall constitute a contract between the Authority, the Board and the Holders from time to
time of the Bonds and the pledge made in this Resolution by the Board and the covenants and
agreements set forth in this Resolution to be performed by the Authority and the Board shall be for
the equal and proportionate benefit, security, and protection of all Holders, without preference,
priority, or distinction as to security or otherwise of any of the Bonds authorized hereunder over any
of the others by reason of time of issuance, sale, or maturity thereof or otherwise for any cause
whatsoever, except as expressly provided in or permitted by this Resolution.
Section 26. SEVERABILITY OF INVALID PROVISIONS. If any one or more of the
covenants, agreements, or provisions herein contained shall be held contrary to any express
provisions of law or contrary to the policy of express law, though not expressly prohibited, or
against public policy, or shall for any reason whatsoever be held invalid, then such covenants,
agreements, or provisions shall be null and void and shall be deemed separable from the remaining
covenants, agreements, or provisions and shall in no way affect the validity of any of the other
provisions hereof or of the Bonds issued hereunder.
Section 27. PAYMENT AND PERFORMANCE ON BUSINESS DAYS. Except as
provided to the contrary in the FORM OF BONDS, whenever under the terms of this Resolution or
the Bonds, the performance date of any provision hereof or thereof, including the payment of
F:\WDOX\CLIENTS\009425\00011M0074808.WPD / 3 30
principal of or interest on the Bonds, shall occur on a day other than a Business Day, then the
performance thereof, including the payment of principal of and interest on the Bonds, need not be
made on such day but may be performed or paid, as the case may be, on the next succeeding
Business Day with the same force and effect as if made on the date of performance or payment.
Section 28. LIMITATION OF BENEFITS WITH RESPECT TO THE
RESOLUTION. With the exception of the rights or benefits herein expressly conferred, nothing
expressed or contained herein or implied from the provisions of this Resolution or the Bonds is
intended or should be construed to confer upon or give to any person other than the Authority, the
Board, the Holders, and the Paying Agent/Registrar, any legal or equitable right, remedy, or claim
under or by reason of or in respect to this Resolution or any covenant, condition, stipulation,
promise, agreement, or provision herein contained. This Resolution and all of the covenants,
conditions, stipulations, promises, agreements, and provisions hereof are intended to be and shall
be for and inure to the sole and exclusive benefit of the Authority, the Board, the Holders, and the
Paying Agent/Registrar as herein and therein provided.
Section 29. CUSTODY, APPROVAL, BOND COUNSEL'S OPINION, CUSIP
NUMBERS, PREAMBLE AND INSURANCE. The Executive Director of the Authority is hereby
authorized to have control of the Bonds issued hereunder and all necessary records and proceedings
pertaining to the Bonds pending their delivery and approval by the Attorney General of the State of
Texas. The Executive Director of the Authority is hereby authorized, to the extent deemed
necessary or advisable thereby, in the discretion thereof, to request that the Attorney General
approve the Bonds as permitted by Chapter 1202, in which case the Executive Director of the
Authority also is authorized to request the Comptroller of Public Accounts register the Bonds, and
to cause an appropriate legend reflecting such approval and registration to appear on the Bonds and
the substitute Bonds. The approving legal opinion of Bond Counsel and the assigned CUSIP
numbers may be printed on the Bonds and on any Bonds issued and delivered in exchange or
replacement of any Bond, but the presence or absence thereof shall not affect the legality or
enforceability of the Bonds, and shall be solely for the convenience and information of the registered
owners of the Bonds. The preamble to this Resolution is hereby adopted and made a part of this
Resolution for all purposes. If insurance is obtained on any of the Bonds, the Bonds shall bear, as
appropriate and applicable, a legend concerning insurance as provided by the municipal bond
insurance company issuing any such insurance.
Section 30. FURTHER PROCEDURES. The Chair of the Board, the Chair of the
Authority, the Executive Director of the Authority, the Designated Financial Officer, and all other
officers, employees, and agents of the Authority and the University, and each of them, shall be and
they are hereby expressly authorized, empowered, and directed from time to time and at any time
to do and perform all such acts and things and to execute, acknowledge, and deliver in the name and
under the corporate seal and on behalf of the Authority or the Board, as appropriate, all such
instruments, whether or not herein mentioned, as may be necessary or desirable in order to carry out
the terms and provisions of this Resolution, the Bonds, the sale and delivery of the Bonds and fixing
all details in connection therewith, and to approve any Official Statement, or supplements thereto,
in connection with the Bonds. The Designated Financial Officer specifically is authorized to execute
Schedule I attached to this Resolution for the purposes described in Section 10(a) of this Resolution.
F:\WDOX\CLIENTS\009425\00011\10074808. WPD / 3 31
Section 31. REPEAL OF CONFLICTING RESOLUTIONS. All resolutions and all
parts of any resolutions which are in conflict or inconsistent with this Resolution are hereby repealed
and shall be of no further force or effect to the extent of such conflict or inconsistency.
Section 32. REFERENCES TO AUTHORITY. By operation of Texas law including,
but not by way of limitation, the TPFA Act and the Texas Education Code being amended by the
Texas legislature, should the Authority no longer be charged with the duty and exclusive authority
to act on behalf of the University in issuing bonds on its behalf, all references to the Authority in this
Resolution shall be null and void and of no effect. Furthermore, should the Authority no longer be
charged with the duty and exclusive authority to act on behalf of the University in issuing bonds on
its behalf, the Authority shall be deemed to have discharged all of its duties and responsibilities to
the University under this Resolution, and all such duties and responsibilities shall be assumed by
the University.
Section 33. PERFECTION OF PLEDGE. Chapter 1208, Government Code, applies
to the issuance of the Bonds and the pledge of the Pledged Revenues granted under Section 2 of this
Resolution, and such pledge is therefore valid, effective and perfected. If Texas law is amended at
any time while the Bonds are outstanding and unpaid such that the pledge of the Pledged Revenues
under Section 2 of this Resolution is to be subject to the filing requirements of Chapter 9, Business
& Commerce Code, then in order to preserve to the registered owners of the Bonds the perfection
of the security interest in said pledge, the Authority agrees to take such measures as it determines
are reasonable and necessary under Texas law to comply with the applicable provisions of Chapter
9, Business & Commerce Code and enable a filing to perfect the security interest in said pledge to
occur.
Section 34. BOND INSURANCE. In the event the Bonds are qualified for municipal
bond insurance and the winning bidder for the Bonds wishes to purchase such municipal bond
insurance for the benefit of the holders of the Bonds, the cost thereof will be paid by the winning
bidder. The municipal bond insurer shall be deemed to be the sole holder of the Bonds insured by
it for the purpose of exercising any voting right or privilege or giving any consent or direction or
taking any other action that the holders of the Bonds insured by it are entitled to take pursuant to
Sections 18 and 20 of this Resolution.
Section 35. PUBLIC NOTICE. It is hereby found and determined that each of the
officers and members of the Authority and the Board was duly and sufficiently notified officially
and personally, in advance, of the time, place, and purpose of their respective meetings at which this
Resolution was adopted, and that this Resolution would be introduced and considered for adoption
at said meetings; and that said meetings were open to the public, and public notice of the time, place,
and purpose of said meetings was given, all as required by Chapter 551, Texas Government Code.
In addition, the meeting of the Board was held as a telephone conference call pursuant to Section
551.121, Texas Government Code, and that it was necessary to convene said meeting immediately
to finalize the terms and conditions relating to the sale of the Bonds at a time when it was found to
be difficult, and possibly impossible, to convene a quorum of the Board in one location.
F:\WDOX\CLIENTS\009425\00011\10074808. WPD / 3 32
F:\WDOX\CLIENTS\009425\00011\10074808. WPD / 3 33
SCHEDULE I
$
Texas Public Finance Authority Stephen F. Austin State University
Revenue Financing System Revenue Bonds, Series 2005
Terms Bonds
Principal Maturity Interest
Amount October 15 Rate
f:\wdox\clients\oo9425\oooi i\i 0074808.wpd/ 3 Schedule I - Page 1
The Bonds will bear interest from the date set forth above and are payable on October 15,2005 and
semiannually thereafter on April 15 and October 15 of each year until maturity or prior redemption.
The Bonds maturing on and after October 15, 2016 may be redeemed prior to their scheduled
maturities, by the Authority at the option and direction of the University, on October 15, 2015, or
on any date thereafter, at a redemption price equal to the principal amount to be redeemed plus
accrued interest from the most recent interest payment date to the date fixed for redemption.
The Bonds maturing on October 15,20 and October 15,20 (the "Term Bonds") are subject
to mandatory sinking fund redemption prior to their scheduled maturity, and will be redeemed by
the Authority, in part at a redemption price equal to the principal amount to be redeemed plus
accrued interest from the most recent interest payment date to the date of redemption, on the date
and in the principal amounts shown in the following schedule:
Term Bonds Maturing October 15, 20
Redemption Date Principal Amount
*Final Maturity
Term Bonds Maturing October 15, 20_
Redemption Date Principal Amount
* Final Maturity
f:\wdox\clients\oo9425\oooii\ioo74808.wpd/3 Schedule I - Page 2
APPROVED:
By:
Name: Dr. Roland K. Smith
Title: Vice President for Business Affairs
F:\WDOX\CLIENTS\009425\00011\10074808. WPD / 3
EXHIBIT A
DEFINITIONS
As used in this Resolution the following terms and expressions shall have the meanings set
forth below, unless the text hereof specifically indicates otherwise:
"Annual Debt Service Requirements" means, for any Fiscal Year, the principal of and
interest on all Parity Obligations coming due at Maturity or Stated Maturity (or that could come due
on demand of the owner thereof other than by acceleration or other demand conditioned upon default
by the Board on such Debt, or be payable in respect of any required purchase of such Debt by the
Board) in such Fiscal Year, and, for such purposes, any one or more of the following rules shall
apply at the election of the Board:
(1) Committed Take Out. If the Board, or the Authority on behalf of the Board, has
entered into a Credit Agreement constituting a binding commitment within normal
commercial practice to discharge any of its Funded Debt at its Stated Maturity (or, if due on
demand, at any date on which demand may be made) or to purchase any of its Funded Debt
at any date on which such Debt is subject to required purchase, all under arrangements
whereby the obligation to repay the amounts advanced for such discharge or purchase
constitutes Funded Debt, then the portion of the Funded Debt committed to be discharged
or purchased shall be excluded from such calculation and the principal of and interest on the
Funded Debt incurred for such discharging or purchase that would be due in the Fiscal Year
for which the calculation is being made, if incurred at the Stated Maturity or purchase date
of the Funded Debt to be discharged or purchased, shall be added;
(2) Balloon Debt. If the principal (including the accretion of interest resulting from
original issue discount or compounding of interest) of any series or issue of Funded Debt due
(or payable in respect of any required purchase of such Funded Debt by the Board) in any
Fiscal Year either is equal to at least 25% of the total principal (including the accretion of
interest resulting from original issue discount or compounding of interest) of such Funded
Debt or exceeds by more than 50% the greatest amount of principal of such series or issue
of Funded Debt due in any preceding or succeeding Fiscal Year (such principal due in such
Fiscal Year for such series or issue of Funded Debt being referred to herein as "Balloon
Debt"), the amount of principal of such Balloon Debt taken into account during any Fiscal
Year shall be equal to the debt service calculated using the original principal amount of such
Balloon Debt amortized over the Term of Issue on a level debt service basis at an assumed
interest rate equal to the rate borne by such Balloon Debt on the date of calculation;
(3) Consent Sinking Fund. In the case of Balloon Debt (as defined in clause (2)
above), if a Designated Financial Officer shall deliver to the Board and the Authority an
Officer's Certificate providing for the retirement of (and the instrument creating such
Balloon Debt shall permit the retirement of), or for the accumulation of a sinking fund for
(and the instrument creating such Balloon Debt shall permit the accumulation of a sinking
F:\WDOX\CLIENTS\009425\00011\10074808. WPD / 3 A-1
fund for), such Balloon Debt according to a fixed schedule stated in such Officer's Certificate
ending on or before the Fiscal Year in which such principal (and premium, if any) is due,
then the principal of (and, in the case of retirement, or to the extent provided for by the
sinking fund accumulation, the premium, if any, and interest and other debt service charges
on) such Balloon Debt shall be computed as if the same were due in accordance with such
schedule, provided that this clause (3) shall apply only to Balloon Debt for which the
installments previously scheduled have been paid or deposited to the sinking fund
established with respect to such Debt on or before the times required by such schedule; and
provided further that this clause (3) shall not apply where the Board has elected to apply the
rule set forth in clause (2) above;
(4) PrepaidDebt. Principal of and interest on Parity Obligations, or portions thereof,
shall not be included in the computation of the Annual Debt Service Requirements for any
Fiscal Year for which such principal or interest are payable from funds on deposit or set
aside in trust for the payment thereof at the time of such calculations (including without
limitation capitalized interest and accrued interest so deposited or set aside in trust) with a
financial institution acting as fiduciary with respect to the payment of such Debt;
(5) Variable Rate, As to any Parity Obligation that bears interest at a variable
interest rate which cannot be ascertained at the time of calculation of the Annual Debt
Service Requirement then, at the option of the Board, either: (1) an interest rate equal to the
average rate borne by such Parity Obligations (or by comparable debt in the event that such
Parity Obligations has not been outstanding during the preceding 24 months) for any 24
month period ending within 30 days prior to the date of calculation; or (2) an interest rate
equal to the 30-year Tax-Exempt Revenue Bond Index (as most recently published in The
Bond Buyer), shall be presumed to apply for all future dates, unless such index is no longer
published in The Bond Buyer, in which case an index of tax-exempt revenue bonds with
maturities of at least 20 years which is published in a newspaper or journal with national
circulation may be used for this purpose. If two Series of Parity Obligations which bear
interest at variable interest rates, or one or more maturities within a Series, of equal par
amounts, are issued simultaneously with inverse floating interest rates providing a composite
fixed interest rate for such Parity Obligations taken as a whole, such composite fixed rate
shall be used in determining the Annual Debt Service Requirement with respect to such
Parity Obligations;
(6) Guarantee. In the case of any guarantee, as described in clause (2) of the
definition of Debt, no obligation will be counted if the Board does not anticipate in its annual
budget that it will make any payments on the guarantee. If, however, the Board is making
payments on a guarantee or anticipates doing so in its annual budget, such obligation shall
be treated as Parity Obligations and calculations of Annual Debt Service Requirements with
respect to such guarantee shall be made assuming that the Board will make all additional
payments due under the guaranteed obligation. If the entity whose obligation is guaranteed
cures all defaults and the Board no longer anticipates making payments under the guarantee,
the guaranteed obligations shall not be included in the calculation of Annual Debt Service
F:\WDOX\CLIENTS\009425\00011M0074808.WPD / 3 A-2
Requirements;
(7) Commercial Paper. With respect to any Parity Obligations issued in the form of
commercial paper with maturities not exceeding 270 days, the interest on such Parity
Obligations shall be calculated in the manner provided in clause (5) of this definition and the
maturity schedule shall be calculated in the manner provided in clause (2) of this definition;
and
(8) Credit Agreement Payments. If the Board, or the Authority on behalf of the
Board, has entered into a Credit Agreement in connection with an issue of Debt, payments
due under the Credit Agreement (other than payments for fees and expenses), for either the
Board or, the Authority on behalf of the Board, as the case may be, or the Credit Provider,
shall be included in such calculation, except to the extent that the payments are already taken
into account under (1) through (7) above and any payments otherwise included above under
(1) through (7) which are to be replaced by payments under a Credit Agreement, from either
the Board or the Credit Provider, shall be excluded from such calculation.
With respect to any calculation of historic data, only those payments actually made in the subject
period shall be taken into account in making such calculation and, with respect to prospective
calculations, only those payments reasonably expected to be made in the subject period shall be
taken into account in making the calculation.
"Annual Direct Obligation" means the amount budgeted each Fiscal Year by the Board with
respect to each Participant in the Financing System to satisfy said Participant's proportion of debt
service (calculated based on said Participant's Direct Obligation) due by the Board in such Fiscal
Year on Outstanding Parity Obligations.
"Annual Obligation" means, with respect to each Participant in the Financing System and
for each Fiscal Year, said Participant's Annual Direct Ob

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Stephen F. Austin
State University
Minutes of the
Board of Regents
Nacogdoches, Texas
June 8,2005
Volume 212
Table of Contents
Board Minutes for June 8, 2005
Volume 212
05-43 Resolution Authorizing the Sale of the Texas Public Finance Authority
Stephen F. Austin State University Revenue Financing System revenue Bonds,
Series 2005, in the Aggregate Principal Amount of $17,215,000; Authorizing
Actions by the Texas Public Finance Authority, Stephen F. Austin State
University, and Representatives thereof in Connection with the Sale and
Delivery of said Bonds; and Resolving Other Matters Related Thereto 3
Minutes of the Phone Meeting of the
Board of Regents of Stephen F. Austin State University
Nacogdoches, TX
June 8,2005
The Meeting of the Board of Regents was called to order at 1:03 p.m., Wednesday June
85 2005 by Chairman Fred Wulf.
PRESENT: (in Nacogdoches, TX):
Board Members: Fred Wulf
Joe Max Green
Vice-President: Roland Smith
Baker Pattillo
General Counsel: Yvette Clark
SFA administrators, staff, and visitors
PRESENT: (On the Phone):
Board Members: Valerie Ertz
Kenneth James
Gary Lopez
Paul Pond
Mike Wilhite
Texas Public Finance Authority: Kim Edwards
Judith Porris
First Southwest Company: Mary Williams
Delgado, Acosta, Braden & Jones: Paul Braden
ABSENT:
Board Members: Margarita de la Garza-Grahm
Lyn Stevens
President: Tito Guerrero
Vice-President: Mary Cullinan
Jerry Holbert
Kim Edwards, from the Texas Public Finance Authority, reported that the sale of bonds
took place in the morning of June 8, 2005. At 11:00 a.m., the TPFA board formally
approved the sale to Merrill Lynch. Merrill Lynch submitted the lowest of 8 bids
received. The interest rate is 4.1236%. After her presentation, the Board formally took
up the resolution below:
05-43
Resolution Authorizing the Sale of the Texas Public Finance Authority
Stephen F. Austin State University Revenue Financing System revenue Bonds,
Series 2005, in the Aggregate Principal Amount of $17,215,000; Authorizing
Actions by the Texas Public Finance Authority, Stephen F. Austin State
University, and Representatives thereof in Connection with the Sale and
Delivery of said Bonds; and Resolving Other Matters Related Thereto.
Upon motion from Regent Ertz and seconded by Regent Pond with all members voting
aye, the Board of Regents adopted the resolution. The resolution is attached in the
appendix.
Upon motion from Regent Ertz and seconded by Regent Wilhite, the meeting was
adjourned by Chairman Wulf at 1:11 p.m.
APPENDIX SECTION
RESOLUTION
AUTHORIZING THE SALE OF THE TEXAS PUBLIC
FINANCE AUTHORITY STEPHEN F. AUSTIN STATE
UNIVERSITY REVENUE FINANCING SYSTEM REVENUE
BONDS, SERIES 2005, IN THE AGGREGATE PRINCIPAL
AMOUNT OF $17,215,000; AUTHORIZING ACTIONS BY
THE TEXAS PUBLIC FINANCE AUTHORITY, STEPHEN F.
AUSTIN STATE UNIVERSITY, AND REPRESENTATIVES
THEREOF IN CONNECTION WITH THE SALE AND
DELIVERY OF SAID BONDS; AND RESOLVING OTHER
MATTERS RELATED THERETO
F:\WDOX\CLIENTS\009425\00011M0074808.WPD / 3
RESOLUTION
AUTHORIZING THE SALE OF THE TEXAS PUBLIC
FINANCE AUTHORITY STEPHEN F. AUSTIN STATE
UNIVERSITY REVENUE FINANCING SYSTEM REVENUE
BONDS, SERIES 2005, IN THE AGGREGATE PRINCIPAL
AMOUNT OF $17,215,000; AUTHORIZING ACTIONS BY
THE TEXAS PUBLIC FINANCE AUTHORITY, STEPHEN F.
AUSTIN STATE UNIVERSITY, AND REPRESENTATIVES
THEREOF IN CONNECTION WITH THE SALE AND
DELIVERY OF SAID BONDS; AND RESOLVING OTHER
MATTERS RELATED THERETO
TABLE OF CONTENTS Page
PREAMBLE 1
Section 1. REVENUE FINANCING SYSTEM AND ISSUANCE OF
PARITY OBLIGATIONS 4
Section 2. SECURITY AND PLEDGE 4
Section 3. COVENANTS RELATING TO PLEDGED REVENUES 5
Section 4. GENERAL COVENANTS 6
Section 5. ISSUANCE OF ADDITIONAL OBLIGATIONS 9
Section 6. DISPOSITION OF ASSETS ATTRIBUTABLE TO
FINANCING SYSTEM PARTICIPANTS 9
Section 7. COMBINATION, DIVISION, RELEASE AND ADMISSION
OF NEW INSTITUTIONS UNDER THE FINANCING SYSTEM . 10
Section 8. WAIVER OF CERTAIN COVENANTS 11
Section 9. AMOUNT, PURPOSE, AND DESIGNATION OF THE BONDS . 11
Section 10. DATE, DENOMINATIONS, NUMBERS, MATURITIES
AND TERMS OF BONDS 11
Section 11. INTEREST 13
Section 12. REGISTRATION, TRANSFER, AND EXCHANGE;
AUTHENTICATION; BOOK-ENTRY-ONLY SYSTEM 13
Section 13. FORM OF BONDS 18
Section 14. INDIVIDUALS NOT LIABLE 18
F:\WDOX\CLIENTS\009425\00011\10074808.WPD / 3
Section 15. SECURITY FOR THE BONDS 19
Section 16. PAYMENTS 19
Section 17. DAMAGED, MUTILATED, LOST, STOLEN, OR
DESTROYED BONDS 19
Section 18. REMEDIES 20
Section 19. DEFEASANCE OF OBLIGATIONS 20
Section 20. AMENDMENT OF RESOLUTION 22
Section 21. COVENANTS REGARDING TAX-EXEMPTION 24
Section 22. PRIOR REDEMPTION 27
Section 23. OTHER REPRESENTATIONS AND COVENANTS 28
Section 24. CONTINUING DISCLOSURE 28
Section 25. RESOLUTION TO CONSTITUTE A CONTRACT;
EQUAL SECURITY 31
Section 26. SEVERABILITY OF INVALID PROVISIONS 31
Section 27. PAYMENT AND PERFORMANCE ON BUSINESS DAY 31
Section 28. LIMITATION OF BENEFITS WITH RESPECT TO
THE RESOLUTION 31
Section 29. CUSTODY, APPROVAL, BOND COUNSEL'S
OPINION, CUSIP NUMBERS, PREAMBLE AND INSURANCE . 31
Section 30. FURTHER PROCEDURES 32
Section 31. REPEAL OF CONFLICTING RESOLUTIONS 32
Section 32. REFERENCES TO AUTHORITY 32
Section 33. PERFECTION OF PLEDGE 32
Section 34. BOND INSURANCE 33
Section 35. PUBLIC NOTICE 33
SCHEDULE I
EXHIBIT A DEFINITIONS A-l
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EXHIBIT B FORM OF BONDS B-l
EXHIBIT C DESCRIPTION OF ANNUAL FINANCIAL INFORMATION ... C-l
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RESOLUTION
AUTHORIZING THE SALE OF THE TEXAS PUBLIC
FINANCE AUTHORITY STEPHEN F. AUSTIN STATE
UNIVERSITY REVENUE FINANCING SYSTEM REVENUE
BONDS, SERIES 2005, IN THE AGGREGATE PRINCIPAL
AMOUNT OF $17,215,000; AUTHORIZING ACTIONS BY
THE TEXAS PUBLIC FINANCE AUTHORITY, STEPHEN F.
AUSTIN STATE UNIVERSITY, AND REPRESENTATIVES
THEREOF IN CONNECTION WITH THE SALE AND
DELIVERY OF SAID BONDS; AND RESOLVING OTHER
MATTERS RELATED THERETO
WHEREAS, in order to reduce costs, increase borrowing capacity, provide additional
security to the credit markets, and provide greater financial flexibility, the Board of Regents (the
"Board") of Stephen F. Austin State University (the "University") deemed it necessary and desirable
to establish a revenue financing program for revenue supported indebtedness to provide funds to
acquire, purchase, construct, improve, renovate, enlarge or equip property, buildings, structures,
facilities, roads, or related infrastructure at the University, as well as any institution, branch or entity
hereafter placed under the control and governance of the Board, to the extent permitted by Chapter
55, Texas Education Code, including specifically, but not by way of limitation, Section 55.02
thereof; and
WHEREAS, Section 55.13 of the Texas Education Code authorizes the issuance of revenue
bonds for the purpose of providing funds to acquire, purchase, construct, improve, enlarge, and/or
equip any property, buildings, structures, activities, services, operations, or other facilities, for and
on behalf of the University; and
WHEREAS, the University has the authority to pledge the Pledged Revenues, including
student center fees, pursuant to Sections 55.13, 55.17 and 54.520 of the Texas Education Code, for
the purpose of paying principal and interest amounts due on revenue bonds issued for and behalf of
the University from time to time; and
WHEREAS, the University is planning to construct, equip and furnish a new student
residence hall and associated parking garage and passed a Resolution, on March 8,2005, authorizing
a request for financing from the Texas Public Finance Authority (the "Authority");
WHEREAS, the Authority is a public authority and body politic and corporate duly
established and existing under the laws of the State of Texas, including particularly Chapter 1232,
Texas Government Code (hereafter referred to as the "TPFA Act"); and
WHEREAS, Section 1232.101 of the TPFA Act recites that the Authority has the exclusive
authority to act on behalf of the University in issuing bonds on its behalf, and Section 55.13(c) of
the Texas Education Code provides that the Authority shall exercise the authority of the Board to
issue bonds on behalf of the University, in the manner provided by Subchapter B of Chapter 55,
Texas Education Code; and
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WHEREAS, Section 55.13, Texas Education Code, recites that the Authority has all the
rights and duties granted or assigned to and is subject to the same conditions as the Board under
Chapter 55, Texas Education Code; and
WHEREAS, the resolution entitled "Resolution Authorizing the Sale of the Board of Regents
of Stephen F. Austin State University Revenue Financing System, Texas Public Finance Authority
Revenue Bonds, Series 1998, in an Aggregate Principal Amount Not to Exceed $6 Million;
Authorizing Actions by the Texas Public Finance Authority, Stephen F. Austin State University and
Representatives Thereof in Connection with the Sale and Delivery of Said Bonds; and Resolving
Other Matters Related Thereto" (the "Underlying Resolution") was adopted by the Board on July
14, 1998 and by the Authority on August 12, 1998; and
WHEREAS, the Underlying Resolution established the Stephen F. Austin State University
Revenue Financing System for the purpose of providing a financing structure for revenue supported
indebtedness at the University; and
WHEREAS, pursuant to the terms of the Underlying Resolution, the Authority delivered its
Board of Regents of Stephen F. Austin State University Revenue Financing System, Texas Public
Finance Authority Revenue Bonds, Series 1998, in the aggregate principal amount of $6,000,000
(the "Series 1998 Bonds");
WHEREAS, pursuant to the terms of a resolution adopted in compliance with the
requirements of the Underlying Resolution by the Board on March 8, 2000, and by the Authority
on March 8, 2000, the Authority delivered its Board of Regents of Stephen F. Austin State
University Revenue Financing System, Texas Public Finance Authority Revenue Bonds, Series
2000, in the aggregate principal amount of $7,000,000 (the "Series 2000 Bonds"); and
WHEREAS, pursuant to the terms of a resolution adopted in compliance with the
requirements of the Underlying Resolution by the Board on June 18,2002, and by the Authority on
June 18, 2002, the Authority delivered its Board of Regents of Stephen F. Austin State University
Revenue Financing System, Texas Public Finance Authority Revenue Bonds, Series 2002, in the
aggregate principal amount of $14,070,000 (the "Series 2002 Bonds"); and
WHEREAS, pursuant to the terms of a resolution adopted in compliance with the
requirements of the Underlying Resolution by the Board on November 19, 2002, and by the
Authority on November 19,2002, the Authority delivered its Board of Regents of Stephen F. Austin
State University Revenue Financing System, Texas Public Finance Authority Revenue Bonds, Series
2002A, in the aggregate principal amount of $1,320,000 (the "Series 2002A Bonds"); and
WHEREAS, pursuant to the terms of a resolution adopted in compliance with the
requirements of the Underlying Resolution by the Board on February 18,2004, and by the Authority
on February 18, 2004, the Authority delivered its Board of Regents of Stephen F. Austin State
University Revenue Financing System, Texas Public Finance Authority Revenue Bonds, Series
2004, in the aggregate principal amount of $26,030,000 (the "Series 2004 Bonds", and collectively
with the Series 1998 Bonds, the Series 2000 Bonds, the Series 2002 Bonds, and the Series 2004
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Bonds, the "Previously Issued Parity Obligations"); and
WHEREAS, pursuant to the terms of a resolution adopted in compliance with the
requirements of the Underlying Resolution by the Board on August 17,2004, and by the Authority
on August 17, 2004, the Authority delivered its Board of Regents of Stephen F. Austin State
University Revenue Financing System, Texas Public Finance Authority Revenue Bonds, Series
2004A, in the aggregate principal amount of $5,460,000 (the "Series 2004A Bonds", and
collectively with the Series 1998 Bonds, the Series 2000 Bonds, the Series 2002 Bonds, the Series
2004 Bonds, and the Series 2004A Bonds, the "Previously Issued Parity Obligations"); and
WHEREAS, the Previously Issued Parity Obligations were secured by a lien on and pledge
of the "Pledged Revenues" (as defined in the Underlying Resolution), which lien and pledge were
made subject to the lien on and pledge of the "Prior Encumbered Revenues" (as defined in the
Underlying Resolution) securing the "Outstanding Revenue Bonds" (as hereinafter defined); and
WHEREAS, the Underlying Resolution permits the Authority, at the request of the Board,
to issue "Parity Obligations" secured by a lien on and pledge of the Pledged Revenues on a parity
with the Previously Issued Parity Obligations; and
WHEREAS, the Board has requested that the Authority issue bonds on behalf of the
University, pursuant to the authorization granted to the University by Subchapter B of Chapter 55
of the Texas Education Code, as Parity Obligations under the Underlying Resolution, and further
requests that the Authority adopt this Resolution in furtherance of such objective; and
WHEREAS, the Authority finds it necessary and advisable to adopt this Resolution, and
further acknowledges that by adopting this Resolution it will be bound by and agrees to follow the
covenants set forth in this Resolution in its capacity of effecting the sale of the bonds hereinafter
described on behalf of the University; and
WHEREAS, the Board finds it necessary and advisable to adopt this Resolution, and further
acknowledges that by adopting this Resolution it will be bound by and agrees to follow the
covenants set forth in this Resolution; and
WHEREAS, the terms used in this Resolution and not otherwise defined shall have the
meaning given in Exhibit A to this Resolution attached hereto and made a part hereof;
NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF REGENTS OF
STEPHEN F. AUSTIN STATE UNIVERSITY:
NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS OF
THE TEXAS PUBLIC FINANCE AUTHORITY:
Section 1. REVENUE FINANCING SYSTEM AND ISSUANCE OF PARITY
OBLIGATIONS. In the Underlying Resolution, the Stephen F. Austin State University Revenue
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Financing System (the "Financing System") has been established, for the purpose of providing a
financing structure for revenue supported indebtedness to provide funds to acquire, purchase,
construct, improve, renovate, enlarge or equip property, buildings, structures, facilities, roads or
related infrastructure at the University, as well as at any institution, branch or entity hereafter placed
under the control and governance of the Board, under authority of the pertinent provisions of the
Texas Education Code.
Section 2. SECURITY AND PLEDGE, (a) Pledge. Subject to the provisions of the
resolutions authorizing Prior Encumbered Obligations, Parity Obligations shall be secured by and
payable from a lien on the Pledged Revenues, and the Board hereby assigns and pledges the Pledged
Revenues to the payment of the principal of, premium, if any, and interest on Parity Obligations, and
the Pledged Revenues are further pledged to the establishment and maintenance of any fbnds which
may be provided to secure the repayment of Parity Obligations in accordance with this Resolution.
The Authority, upon approval and consent of the Board, may execute and deliver one or more Credit
Agreements to additionally secure Parity Obligations. Credit Agreements may also be secured by
a pledge of Pledged Revenues on a parity with or subordinate to Parity Obligations.
(b) Additional Participants. As provided in Section 7 of this Resolution, institutions
which may hereafter come under the control and governance of the Board may become Participants
in the Financing System and such institutions may, at such time, have outstanding obligations
secured by the Prior Encumbered Revenues and that, therefore, the lien on and pledge of the Pledged
Revenues established pursuant to this Resolution and effective when such institutions become
Participants in the Financing System will be subject and subordinate only to such institutions'
outstanding Prior Encumbered Obligations.
(c) Restriction on Issuance of Additional Debt on a Parity with Prior Encumbered
Obligations. Except as provided in Section 4(g) and for so long as any Parity Obligations are
Outstanding, no additional bonds, notes, or other obligations may be issued or incurred by the Board
on a parity with any Prior Encumbered Obligations.
(d) Parity Obligations are Special Obligations. All Parity Obligations and the premium,
if any, and the interest thereon shall constitute special obligations of the Board payable from the
Pledged Revenues, and the owners thereof shall never have the right to demand payment out of
funds raised or to be raised by taxation, or from any source other than the source specified in this
Resolution. The obligation of the Board to pay or cause to be paid the amounts payable under this
Resolution out of the Pledged Revenues shall be absolute, irrevocable, complete, and unconditional,
and the amount, manner, and time of payment of such amounts shall not be decreased, abated,
rebated, set-off, reduced, abrogated, waived, diminished, or otherwise modified in any manner or
to any extent whatsoever, regardless of any right of setoff, recoupment, or counterclaim that the
Board might otherwise have against any owner or any other party and regardless of any contingency,
force majeure, event, or cause whatsoever and notwithstanding any circumstance or occurrence that
may arise or take place before, during, or after the issuance of Parity Obligations while any Parity
Obligations are Outstanding.
Section 3. COVENANTS RELATING TO PLEDGED REVENUES, (a) Rate
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Covenant. In each Fiscal Year, the Board shall establish, charge, and use its reasonable efforts to
collect at each Participant the Pledged Revenues which, if collected, would be sufficient to meet all
financial obligations of the Board for such Fiscal Year relating to the Financing System including
all deposits or payments due on or with respect to: (i) the Prior Encumbered Obligations; and (ii)
all Outstanding Parity Obligations.
(b) Tuition. Subject to the provisions of the resolutions authorizing Prior Encumbered
Obligations and to the other provisions of this Resolution, the Board covenants and agrees to fix,
levy, charge and collect at each Participant student tuition charges required or authorized by law to
be imposed on students enrolled at each Participant (excepting, with respect to each series or issue
of Parity Obligations, any student in a category which, at the time of adoption of a resolution relating
to such Parity Obligations, is exempt by law or by the Board from paying such tuition charges).
Each student (excluding those exempt from payment as provided above), enrolled at each
Participant, respectively, at each regular fall and spring semester and at each term of each summer
session, shall pay tuition charges in such amounts, without any limitation whatsoever, as will be
sufficient at all times, together with other legally available funds, including other Pledged Revenues,
to provide the money to make or pay the principal of, interest on, and other payments or deposits
with respect to Outstanding Parity Obligations when and as required. All changes in the tuition
charged students at each Participant shall be made by resolution of the Board, but such procedure
shall not constitute or be regarded as an amendment of this Resolution, but merely the carrying out
of the provisions and requirements hereof.
(c) Student Center Fees. Subject to the provisions of the resolution authorizing the
Series 2004 Bonds, the Board covenants and agrees to fix, levy, charge and collect student center
fees required or authorized by law to be imposed on students pursuant to Section 54.520 of the
Texas Education Code; provided however, that such student center fees shall be used only for the
purpose of acquiring, constructing, renovating, operating, maintaining, improving, equipping, and
financing a university center or additions to the center.
(d) Anticipated Deficit If the Board determines, for any reason whatsoever, that there
are not anticipated to be legally available funds, including Pledged Revenues, sufficient to meet all
financial obligations of the Board relating to the Financing System including the deposits and
payments due on or with respect to Outstanding Parity Obligations as the same mature or come due,
or that any Participant in the Financing System will be unable to pay its Annual Direct Obligation
in full, then the Board shall fix, levy, charge, and collect such rentals, rates, fees, tuition, or other
charges at each Participant in the Financing System with enrolled students, effective at the next
succeeding regular semester or semesters or summer term or terms, in such amounts, without any
limitation whatsoever (other than as provided in subsection (e) below), as will be at least sufficient
to provide, together with other legally available funds, including Pledged Revenues, the money for
making when due all financial obligations of the Board relating to the Financing System including
all payments and deposits due on or with respect to Outstanding Parity Obligations when and as
required by this Resolution.
(e) Economic Effect of Adjustments. Any adjustments in the rate or manner of
charging for any rentals, rates, fees, tuition, or other charges included in Pledged Revenues at any
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Participant in the Financing System resulting from an event described in subsection (d) above will
be based upon a certificate and recommendation of the Designated Financial Officer, delivered to
the Board, as to the rates and anticipated collection of the Pledged Revenues at each Participant in
the Financing System (after taking into account the anticipated effect the proposed adjustments in
such rentals, rates, fees, tuition, or other charges would have on enrollment and the receipt of
Pledged Revenues and other funds at each Participant in the Financing System) which will be
anticipated to result in: (i) Pledged Revenues attributable to each Participant being sufficient (to the
extent possible) to satisfy the Annual Obligation of such Participant; and (ii) Pledged Revenues
being sufficient, together with other legally available funds, to meet all financial obligations of the
Board relating to the Financing System including all deposits and payments due on or with respect
to: (A) the Prior Encumbered Obligations; and (B) all Outstanding Parity Obligations, when and as
required by this Resolution.
(f) Annual Obligation. If, in the judgment of the Board, any Participant in the Financing
System has been or will be unable to satisfy its Annual Obligation, the Board shall fix, levy, charge,
and collect rentals, rates, fees, and charges for goods and services furnished by such Participant and,
with respect to Participants with enrolled students, tuition, effective at the next succeeding regular
semester or semesters or summer term or terms, in amounts sufficient, without limit (subject to the
provisions of (e) above), together with other legally available funds, including other Pledged
Revenues attributable thereto, to enable it to make its Annual Obligation payments.
(g) Additional Participants. The Board hereby agrees to apply the covenants
hereinabove made to any institution, branch or entity hereinafter placed under the control and
governance of the Board and added as a Participant in the Financing System in accordance with the
provisions of Section 7 hereof.
Section 4. GENERAL COVENANTS. The Board further represents, covenants, and
agrees that while any Parity Obligations or interest thereon is Outstanding:
(a) Payment of Parity Obligations. On or before each payment date it shall make
available to the Paying Agent for such Parity Obligations or to such other party as required by the
resolution authorizing the sale of such Parity Obligations, money sufficient to pay the interest on,
principal of, and premium, if any, on the Parity Obligations as will accrue or otherwise come due
or mature, or be subject to mandatory redemption prior to maturity, on such date and the fees and
expenses related to the Parity Obligations, including the fees and expenses of the Paying Agent and
any Registrar, trustee, remarketing agent, tender agent, or Credit Provider.
(b) Performance. It will faithfully perform at all times any and all covenants,
undertakings, stipulations, and provisions contained in this Resolution, and in each and every Parity
Obligation or evidence thereof.
(c) Redemption. It will duly cause to be called for redemption prior to maturity, and
will cause to be redeemed prior to maturity, all Parity Obligations which by their terms are
mandatorily required to be redeemed prior to maturity, when and as so required.
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(d) Lawful Title. It lawfully owns, has title to, or is lawfully possessed of the lands,
buildings, and facilities now constituting the University, and it will defend said title and title to any
lands, buildings, and facilities which may hereafter become part of the Financing System, for the
benefit of the owners of Parity Obligations against the claims and demands of all persons
whomsoever.
(e) Lawful Authority. It is lawfully qualified to pledge the Pledged Revenues herein
pledged in the manner prescribed herein and has lawfully exercised such right.
(f) Preservation of Lien. Subject to the conditions set forth in Sections 5, 6, and 7 of
this Resolution, it will not do any act or thing whereby the Financing System might or could be
impaired, and that it will at all times maintain, preserve, and keep the real and tangible property of
the Financing System and every part thereof in good condition, repair, and working order and
operate, maintain, preserve, and keep the facilities, buildings, structures, and equipment pertaining
thereto in good condition, repair, and working order.
(g) No Additional Encumbrance. It shall not incur additional Debt secured by the
Pledged Revenues in any manner, except as permitted by this Resolution in connection with Parity
Obligations, unless said Debt is made junior and subordinate in all respects to the liens, pledges,
covenants, and agreements of this Resolution. Notwithstanding anything to the contrary contained
herein, and in addition to the right hereunder to refund the Prior Encumbered Obligations with Parity
Obligations, the Board reserves the right to issue obligations to refund any Prior Encumbered
Obligations and to secure the refunding obligations with the same source or sources securing the
Prior Encumbered Obligations being refunded. Upon the defeasance of the refunded Prior
Encumbered Obligations, the refunding obligations will be Prior Encumbered Obligations (unless
the refunding obligations are made Parity Obligations in accordance with the terms of this
Resolution and the resolution authorizing their issuance) under this Resolution for all purposes.
(h) Investments and Security. It will invest and secure money in all accounts and funds
established pursuant to this Resolution in the manner prescribed by law for such funds, including,
but not by way of limitation, the Public Funds Investment Act (Chapter 2256, Texas Government
Code), Chapter 163, Texas Property Code, and Section 51.0031, Texas Education Code, and in
accordance with written policies adopted by the Board.
(i) Records. It will keep proper books of record and account in which full, true, and
correct entries will be made of all dealings, activities, and transactions relating to the University.
Each year while Parity Obligations are Outstanding, the Board will prepare from such books of
record and account an annual financial report of the University and shall furnish such report to the
Authority, to the principal municipal bond rating agencies, and to any owner of Parity Obligations
who shall request same. In addition, the Board shall submit such financial report and other
information required by law for examination in connection with financial compliance and other
audits required to be conducted by the Office of the Auditor of the State of Texas.
(j) Inspection of Books. It will permit the Authority and any owner or owners of
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twenty-five percent (25%) or more of the then Outstanding Principal Amount at all reasonable times
to inspect all records, accounts, and data of the Board relating to the University and the Financing
System.
(k) Annual and Direct Obligations. In establishing the annual budget for each
Participant in the Financing System, it shall provide for the satisfaction by each Participant in the
Financing System of its Annual Obligation. The Direct Obligation shall represent the financial
responsibility of each Participant in the Financing System with respect to Outstanding Parity
Obligations. Each such Participant's Direct Obligation and Annual Obligation shall be evidenced
by a financing agreement between the Board and each Participant.
(1) Determination of Outstanding Parity Obligations. For all purposes of this
Resolution, the judgment of the chief financial officer of the University, presently the Vice President
for Business Affairs, shall be deemed final in the determination of which obligations of the Board
constitute Parity Obligations; provided, however, such judgment is subject to confirmation by the
Auditor of the State of Texas in connection with the annual audit of the records of the University.
(m) Execution of Credit Agreements, (i) For so long as the Authority possesses the
exclusive authority to issue bonds on behalf of the University, should the Board or the Authority
determine that it is in the best interests of the University to obtain a Credit Agreement to enhance
the security for or provide for the payment, redemption, or remarketing of Parity Obligations, the
Authority, upon approval of the Attorney General and approval and consent of the Board, may from
time to time and at any time to execute and deliver a Credit Agreement to which the Pledged
Revenues are to be pledged. The Authority agrees that it shall use reasonable efforts to negotiate
and deliver, on behalf of the University, a Credit Agreement containing terms and conditions
mutually acceptable to the Authority and the Board; provided, however, that prior to the Authority
adopting any resolution authorizing the execution and delivery of any such Credit Agreement, it
shall receive from the University an Officer's Certificate to the effect that: (a) the Board has
determined that the Participant for whom the Credit Agreement is to be executed and delivered
possesses the financial capability to satisfy its Direct Obligation after taking into account the
payment obligations under the proposed Credit Agreement; and (b) to the best of his or her
knowledge, the Board is in compliance with all covenants contained in this Resolution and any
resolution adopted authorizing the issuance of Parity Obligations, and is not in default in the
performance and observance of any of the terms, provisions, and conditions hereof or thereof.
(ii) The Board agrees to provide promptly to the Authority substantially final versions
of all documents pertaining to any "credit agreement" (as defined in Chapter 1371, Texas
Government Code), to which the Pledged Revenues are to be pledged, proposed to be executed and
delivered by the Board to enhance the security for or provide for the payment, redemption, or
remarketing of the Prior Encumbered Obligations. The Board further agrees that it shall give written
notice to the Authority no later than thirty (30) days prior to the date the Board considers for
approval any resolution authorizing the execution and delivery of any such credit agreement. The
lien on and pledge of Pledged Revenues to pay the cost of any such credit agreement may be on a
parity with, but not superior to, the lien on and pledge of the Pledged Revenues securing the Parity
Obligations.
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Section5. ISSUANCE OF ADDITIONAL OBLIGATIONS, (a) Parity Obligations.
The Board reserves and shall have the right and power to issue or incur, or request that the
Authority, on its behalf, issue or incur, Parity Obligations for any purpose authorized by law
pursuant to the provisions of this Resolution and the applicable laws of the State of Texas governing
the issuance of bonds for the benefit of the University. The Board, or the Authority acting on behalf
of the Board, may incur, assume, guarantee, or otherwise become liable in respect of any Parity
Obligations if the Board shall have determined that it will have sufficient funds to meet the financial
obligations of each Participant (currently the University) in the Financing System, including
sufficient Pledged Revenues to satisfy the Annual Debt Service Requirements of the Financing
System and to meet all financial obligations of the Board relating to the Financing System. In
addition, the Board shall not issue or incur Parity Obligations unless: (i) the Board shall determine
that the Participant for whom the Parity Obligations are being issued or incurred possesses the
financial capability to satisfy its Direct Obligation after taking into account the then proposed Parity
Obligations; and (ii) a Designated Financial Officer shall deliver to the Board and the Authority a
certificate stating that, to the best of his or her knowledge, the Board is in compliance with all
covenants contained in this Resolution and any resolution adopted authorizing the issuance of Parity
Obligations, and is not in default in the performance and observance of any of the terms, provisions,
and conditions hereof or thereof.
(b) Non-Recourse Debt and Subordinated Debt. Non-Recourse Debt and Subordinated
Debt may be incurred by the Board without limitation, subject to the applicable laws of the State of
Texas.
Section 6. DISPOSITION OF ASSETS ATTRIBUTABLE TO FINANCING
SYSTEM PARTICIPANTS. Except as otherwise may be required to preserve the tax exempt
status of the Bonds, the Board may convey, sell, or otherwise dispose of any properties of each
Participant (currently the University) in the Financing System provided:
(a) Ordinary Course. Such conveyance, sale, or disposition shall be in the ordinary
course of business of such Participant which uses, operates, owns, or is otherwise responsible for
such properties; or
(b) Disposition Upon Board Determination. The Board shall determine that after the
conveyance, sale, or other disposition of such properties, the Board shall have sufficient funds
during each Fiscal Year during which Parity Obligations are to be Outstanding to meet the financial
obligations of each Participant in the Financing System, including sufficient Pledged Revenues to
satisfy the Annual Debt Service Requirements of the Financing System and to meet all financial
obligations of the Board relating to the Financing System.
Section 7. COMBINATION, DIVISION, RELEASE AND ADMISSION OF NEW
INSTITUTIONS UNDER THE FINANCING SYSTEM, (a) Combination and Division.
Notwithstanding anything to the contrary contained herein, it is recognized that certain institutions
which may become Participants in the Financing System may be combined or divided and that so
long as such combined or divided institutions continue to be governed by the Board such action shall
not be in violation of the provisions of this Resolution or require any amendments of the provisions
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hereof.
(b) Release. Subject to the conditions set forth below, any Participant in the Financing
System or portion thereof may be closed and abandoned by law or may be removed from the
Financing System (thus deleting the revenues, income, funds and balances attributable to said
Participant or portion thereof from Pledged Revenues) without violating the terms of this Resolution
provided:
(1) the Board approves and delivers to the Authority an Officers' Certificate to
the effect that, to the knowledge thereof, after the release of such Participant or portion
thereof, the Board will have sufficient funds during each Fiscal Year in which Parity
Obligations shall thereafter be Outstanding to meet the financial obligations of the Board,
including sufficient Pledged Revenues to satisfy the Annual Debt Service Requirements of
the Financing System and to meet all financial obligations of the Board relating to the
Financing System; and
(2) the Board and the Authority receive an Opinion of Counsel which shall state
that such release will not affect the status for federal income tax purposes of interest on any
Outstanding Parity Obligations and that all conditions precedent provided in this Resolution
or any resolution hereafter adopted governing the issuance of Parity Obligations relating to
such release have been complied with; and
(3) (A) if the Participant or portion thereof to be released from the Financing
System is to remain under the governance and control of the Board, the Board must either:
(i) provide, from lawfully available funds, including Pledged Revenues attributable to said
withdrawing Participant, for the payment or discharge of said Participant's Direct Obligation;
or (ii) pledge to the payment of Parity Obligation, additional resources not then pledged in
an amount sufficient to satisfy such withdrawing Participant's Direct Obligation; or
(B) if the Participant or portion thereof to be released from the Financing
System is to no longer be under the governance and control of the Board and remains in
operation independent of the Board, the Board must enter into a binding obligation with the
new governing body of the withdrawing institution or the portion thereof being withdrawn,
obligating said governing body to make payments to the Board at the times and in the
amounts equal to said Participant's Annual Obligation or to pay or discharge said
Participant's Direct Obligation, or, in the case of a portion of a Participant being withdrawn,
the proportion of the Participant's Annual Obligation or Direct Obligation, as the case may
be, attributable to the withdrawing portion of the Participant.
(c) If, after the date of the adoption of this Resolution, the Board desires for an institution
or agency governed by the Board to become a Participant of the Financing System, or if the Board
is required by law to assume the governance of an institution or agency, it may include said
institution or agency in the Financing System with the effect set forth in this Resolution by the
adoption of a resolution amending this Resolution, which resolution shall be binding upon the
Authority.
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Section 8. WAIVER OF CERTAIN COVENANTS. The Board may omit in any
particular instance to comply with any covenant or condition set forth in Sections 3 through 7 hereof
if before or after the time for such compliance the Holders of the same percentage in principal
amount of all Parity Obligations then Outstanding, the consent of which would be required to amend
the provisions hereof to permit such noncompliance, shall either waive such compliance in such
instance or generally waive compliance with such covenant or condition, but no such waiver shall
extend to or affect such covenant or condition except to the extent so expressly waived and, until
such waiver shall become effective, the obligations of the Board and the duties of the Board in
respect to any such covenant or condition shall remain in full force and effect. For purposes of this
Section, if a municipal bond insurance policy has been issued insuring the payment of any
Outstanding Parity Obligations, the term Holder shall mean the company that has issued any such
insurance policy or policies.
Section 9. AMOUNT, PURPOSE, AND DESIGNATION OF THE BONDS. The
"TEXAS PUBLIC FINANCE AUTHORITY STEPHEN F. AUSTIN STATE UNIVERSITY
REVENUE FINANCING SYSTEM REVENUE BONDS, SERIES 2005", are hereby authorized
to be issued and delivered in the aggregate principal amount of $ for the purpose of: (i)
constructing a new student residence hall and associated parking garage; and (ii) paying the costs
related to the issuance of the Bonds. The sale of the Bonds shall be effected by the Authority
pursuant to Section 1232.101 of the TPFA Act and Sections 55.13(c) and 55.17, Texas Education
Code. The adoption of this resolution by the Board shall be deemed to be a request by the Board
to the Authority to issue the Bonds for the purposes stated in this Section.
Section 10. DATE, DENOMINATIONS, NUMBERS, MATURITIES AND TERMS
OF BONDS, (a) Terms of Bonds. Initially there shall be issued, sold, and delivered hereunder
fully registered bonds, without interest coupons, numbered consecutively from R-l upward (except
the initial Bonds delivered to the Attorney General of the State of Texas which shall be numbered
from T-l upward), payable to the respective initial registered owners thereof, or to the registered
assignee or assignees of said bonds or any portion or portions thereof (in each case, the "Registered
Owner"), in the denominations of $5,000 or any integral multiples of $5,000 thereafter (an
"Authorized Denomination"), maturing serially or otherwise on the dates, in the years and in the
principal amounts, respectively, and dated, all as set forth in Schedule I attached to this Resolution.
The Bonds will be sold through a competitive bid sale, the terms of which will be approved by the
Authority on the date this Resolution is adopted by the Authority. The Designated Financial Officer
is authorized to execute Schedule I attached to this Resolution on behalf of the Board to
acknowledge the sale of the Bonds.
(b) Purchaser. The sale of the Bonds to the investment banking firm or firms named in
Schedule I attached to this Resolution (the "Purchaser") at the purchase price set forth therein, is
hereby authorized, ratified and confirmed. One Bond in the principal amount maturing on each
maturity date as set forth in Schedule I attached to this Resolution shall be delivered to the
Purchaser, and the Purchaser shall have the right to exchange such Bonds as provided in Section 12
hereof without cost. The Authority does hereby officially find, determine and declare that the Bonds
were sold to the highest bidder at terms that were the most advantageous reasonably obtained.
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(c) Offering Documents. The Official Notice of Sale and the Official Bid Form, together
with any addenda thereto, prepared and circulated with respect to the sale of the Bonds, are hereby
approved.
(d) Official Statement, (i) The preliminary official statement and the use thereof in the
solicitation of offers for the purchase of the Bonds is hereby approved and the preliminary official
statement is deemed final as of its date (pursuant to the Rule).
(ii) The Authority authorizes the preliminary official statement to be:
(A) supplemented to include such additional information and amendments as may
be necessary to confirm the official statement to the terms of the Bonds and this Resolution;
and
(B) modified if, in the opinion of Bond Counsel, such modification is necessary to
satisfy the disclosure requirements of the applicable federal securities laws.
(iii) Upon the final official statement being modified, if necessary, pursuant to clause (ii)
of this subsection (d), the final official statement, as so supplemented and modified, shall be deemed
to be approved by the Authority as the final official statement (for purposes of the Rule) for the
Bonds and an appropriate number of copies shall be delivered to the Purchaser for use in connection
with the offer and sale of the Bonds.
(e) Bond Proceeds; Deposit to Construction Fund. There is hereby created and
established a separate fund designated as the "Stephen F. Austin State University Series 2005
Bond Proceeds Construction Fund" (the "Construction Fund"). The Construction Fund shall be
held by the University with its depository bank or as otherwise directed by the University. Within
the Construction Fund there shall be established and maintained accounts designated as the
"Accrued Interest Account", the "Cost of Issuance Account" and the "Project Account",
respectively. Moneys deposited in the Construction Fund shall remain therein until from time to
time expended for the purposes described in this Resolution, and shall not be used for any other
purposes whatsoever, except as otherwise provided below, and pending such expenditure, moneys
in the Construction Fund may be invested at the direction of the Designated Financial Officer or the
designee thereof in eligible investments in accordance with the provisions of Section 4(h) of this
Resolution. Interest earnings shall accrue to the respective accounts in which moneys are held and
invested. The Authority shall cause such proceeds of the Bonds to be deposited to the credit of the
Construction Fund, in accordance with a letter of instructions which may be executed on behalf of
the Authority by its Executive Director, which letter shall designate the funds to be deposited to the
credit of the Accrued Interest Account, the Cost of Issuance Account and the Project Account;
provided, that only moneys representing accrued interest and premium, if any, received from the
proceeds of the Bonds shall be deposited to the credit of the Accrued Interest Account. The
University agrees that it shall pay those costs of issuance incurred in connection with the issuance
and delivery of the Bonds as are consistent with the approval of the issuance of the Bonds by the
Texas Bond Review Board and are approved in writing by the Authority, acting through its
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Executive Director. The University shall cause moneys on deposit in the Accrued Interest Account
to be used to pay debt service on the Bonds as the same shall become due and payable. The
University agrees to expend the moneys in the Project Account within the Construction Fund on
costs incurred in connection with the purposes described in Section 9 of this Resolution, consistent
with the provisions of Subchapter B, Chapter 55, Texas Education Code. Any amounts remaining
in the Project Account within the Construction Fund after the payment of all costs incurred in
connection with the purposes set out in clause (i) of Section 9 of this Resolution shall be used for
the payment of the principal of and interest on the Bonds as the same shall become due and payable.
The University shall provide to the Authority an Officer's Certificate, the form and substance of
which is described in the memorandum of understanding between the Authority and the Board
detailing the expenditure of bond proceeds. The Authority hereby finds that the deposit of the
proceeds from the sale of the Bonds in the manner outlined above is consistent with the conditions
surrounding the issuance of bonds previously issued directly by the University, and that the
procedure outlined above is adopted in accordance with Section 1232.101 of the TPFA Act.
(f) In General The Bonds: (i) may be assigned and transferred; (ii) may be exchanged
for other Bonds; (iii) shall have the characteristics; and (iv) shall be signed and sealed, and the
principal of and interest on the Bonds shall be payable, all as provided, and in the manner required
or indicated, in the FORM OF BONDS set forth in Exhibit B to this Resolution.
Section 11. INTEREST. The Bonds shall bear interest calculated on the basis of a 360-
day year composed of twelve 30-day months from the dates specified in the FORM OF BONDS set
forth in Exhibit B to this Resolution to their respective dates of maturity or redemption prior to
maturity at the rates set forth in Schedule I attached to this Resolution.
Section 12. REGISTRATION, TRANSFER, AND EXCHANGE;
AUTHENTICATION; BOOK-ENTRY-ONLY SYSTEM, (a) Paying Agent/Registrar. [Regions
Bank] is hereby appointed to act as the Paying Agent/Registrar for the Bonds. The Designated
Financial Officer is authorized to enter into and carry out a Paying Agent/Registrar Agreement with
the Paying Agent/Registrar with respect to the Bonds, a copy of which is attached to this Resolution.
(b) Registration Books. The Board shall keep or cause to be kept at the corporate trust
office of the Paying Agent/Registrar designated in the Paying Agent/Registrar Agreement (the
"Designated Trust Office") books or records for the registration of the transfer, exchange, and
replacement of the Bonds (the "Registration Books"), and the Paying Agent/Registrar is hereby
appointed to serve as registrar and transfer agent to keep such books or records and make such
registrations of transfers, exchanges, and replacements under such reasonable regulations as the
Board and Paying Agent/Registrar may prescribe; and the Paying Agent/Registrar shall make such
registrations, transfers, exchanges, and replacements as herein provided. The Paying
Agent/Registrar shall obtain and record in the Registration Books the address of the registered owner
of each Bond to which payments with respect to the Bonds shall be mailed, as herein provided; but
it shall be the duty of each registered owner to notify the Paying Agent/Registrar in writing of the
address to which payments shall be mailed, and such interest payments shall not be mailed unless
such notice has been given. The Authority and the Board each shall have the right to inspect the
Registration Books at the Designated Trust Office of the Paying Agent/Registrar during regular
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business hours, but otherwise the Paying Agent/Registrar shall keep the Registration Books
confidential and, unless otherwise required by law, shall not permit their inspection by any other
entity.
(c) Ownership of Bonds. The entity in whose name any Bond shall be registered in the
Registration Books at any time shall be deemed and treated as the absolute owner thereof for all
purposes of this Resolution, whether such Bond shall be overdue, and, to the extent permitted by
law, the Authority, the Board and the Paying Agent/Registrar shall not be affected by any notice to
the contrary; and payment of, or on account of, the principal of, premium, if any, and interest on any
such Bond shall be made only to such registered owner. All such payments shall be valid and
effective to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so
paid.
(d) Payment of Bonds and Interest. The Paying Agent/Registrar shall further act as the
paying agent for paying the principal of, premium, if any, and interest on the Bonds, all as provided
in this Resolution. The Paying Agent/Registrar shall keep proper records of all payments made by
the University and the Paying Agent/Registrar with respect to the Bonds. Notwithstanding any other
provision of this Resolution to the contrary but to the extent permitted by law, the Authority, the
Board and the Paying Agent/Registrar shall be entitled to treat and consider the person in whose
name each Bond is registered in the Registration Books as the absolute owner of such Bond for the
purpose of payment of principal, premium, if any, and interest, with respect to such Bond, for the
purposes of registering transfers with respect to such Bond, and for all other purposes of registering
transfers with respect to such Bonds, and for all other purposes whatsoever. The Paying
Agent/Registrar shall pay all principal of, premium, if any, and interest on the Bonds only to or upon
the order of the respective owners, as shown in the Registration Books as provided in this
Resolution, or their respective attorneys duly authorized in writing, and all such payments shall be
valid and effective to fully satisfy and discharge the Board's obligations with respect to payment of
principal of, premium, if any, and interest on the Bonds to the extent of the sum or sums so paid.
No person other than an owner, as shown in the Registration Books, shall receive a Bond certificate
evidencing the obligation of the Board to make payments of principal, premium, if any, and interest
pursuant to this Resolution.
(e) Authentication. On the date of initial delivery of the Bonds, the initial bonds (the
"Initial Bonds") approved by the Attorney General, and registered and manually signed by the
Comptroller of Public Accounts, will be delivered to the Purchaser or its designee. Upon payment
for the Initial Bonds, the Paying Agent/Registrar shall cancel the Initial Bonds and deliver registered
definitive Bonds to DTC in accordance with Section 12(h). On each substitute Bond issued in
exchange for any Bond or Bonds issued under this Resolution the Paying Agent/Registrar shall
execute the PAYING AGENT/REGISTRAR'S AUTHENTICATION CERTIFICATE (the
"Authentication Certificate"). The Authentication Certificate shall be in the form set forth in the
FORM OF BONDS.
(f) Transfer, Exchange, or Replacement. Each Bond issued and delivered pursuant to
this Resolution, to the extent of the unpaid or unredeemed principal amount thereof, may, upon
surrender of such Bond at the Designated Trust Office of the Paying Agent/Registrar, together with
F:\WDOX\CLIENTS\009425\00011\10074808. WPD / 3 14
a written request therefor duly executed by the registered owner or the assignee or assignees thereof,
or its or their duly authorized attorneys or representatives, with guarantee of signatures satisfactory
to the Paying Agent/Registrar, may, at the option of the registered owner or such assignee or
assignees, as appropriate, be exchanged for fully registered bonds, without interest coupons, in the
appropriate form prescribed in the FORM OF BONDS set forth in this Resolution, in any
Authorized Denomination (subject to the requirement hereinafter stated that each substitute Bond
shall be of the same series and have a single stated maturity date), as requested in writing by such
registered owner or such assignee or assignees, in an aggregate principal amount equal to the unpaid
or unredeemed principal amount of any Bond or Bonds so surrendered, and payable to the
appropriate registered owner, assignee, or assignees, as the case may be. If a portion of any Bond
shall be redeemed prior to its scheduled maturity as provided herein, a substitute Bond or Bonds
having the same series designation and maturity date, bearing interest at the same rate, and payable
in the same manner, in Authorized Denominations at the request of the registered owner, and in an
aggregate principal amount equal to the unredeemed portion thereof, will be issued to the registered
owner upon surrender thereof for cancellation. If any Bond or portion thereof is assigned and
transferred, each Bond issued in exchange therefor shall have the same series designation and
maturity date and bear interest at the same rate and payable in the same manner as the Bond for
which it is being exchanged. Each substitute Bond shall bear a letter and/or number to distinguish
it from each other Bond. The Paying Agent/Registrar shall exchange or replace Bonds as provided
herein, and each fully registered bond delivered in exchange for or replacement of any Bond or
portion thereof as permitted or required by any provision of this Resolution shall constitute one of
the Bonds for all purposes of this Resolution, and may again be exchanged or replaced. On each
substitute Bond issued in exchange for or replacement of any Bond or Bonds issued under this
Resolution there shall be printed an Authentication Certificate, in the form set forth in the FORM
OF BONDS set forth in Exhibit B to this Resolution. An authorized representative of the Paying
Agent/Registrar shall, before the delivery of any such Bond, date and manually sign the
Authentication Certificate, and, except as provided in subsection (e) above, no such Bond shall be
deemed to be issued or outstanding unless the Authentication Certificate is so executed. The Paying
Agent/Registrar promptly shall cancel all Bonds surrendered for transfer, exchange, or replacement.
No additional orders or resolutions need be passed or adopted by the Board or any other body or
person so as to accomplish the foregoing transfer, exchange, or replacement of any Bond or portion
thereof, and the Paying Agent/Registrar shall provide for the printing, execution, and delivery of the
substitute Bonds in typed or printed form and in the manner prescribed herein. Pursuant to Chapter
1206, Texas Government Code, the duty of transfer, exchange, or replacement of Bonds as aforesaid
is hereby imposed upon the Paying Agent/Registrar, and, upon the execution of the Authentication
Certificate, the exchanged or replaced Bond shall be valid, incontestable, and enforceable in the
same manner and with the same effect as the Bonds which were originally issued pursuant to this
Resolution. The Board shall pay the Paying Agent/Registrar's standard or customary fees and
charges, if any, for transferring, and exchanging any Bond or any portion thereof, but the one
requesting any such transfer and exchange shall pay any taxes or governmental charges required to
be paid with respect thereto as a condition precedent to the exercise of such privilege. The Paying
Agent/Registrar shall not be required to make any such transfer, exchange, or replacement of Bonds
or any portion thereof: (i) during the period commencing with the close of business on any Record
Date and ending with the opening of business on the next following interest payment date; or, (ii)
with respect to any Bond or portion thereof called for redemption prior to maturity, within 45 days
F:\WDOX\CLIENTS\009425\00011 \10074808.WPD / 3 15
prior to its redemption date. To the extent possible, any new Bond issued in an exchange,
replacement, or transfer of a Bond will be delivered to the registered owner or assignee of the
registered owner not more than three business days after the receipt of the Bonds to be cancelled and
the written request as described above.
(g) Substitute Paying Agent/Registrar. The Board covenants with the registered owners
of the Bonds that at all times while the Bonds are outstanding the Board will provide a competent
and legally qualified bank, trust company, financial institution, or other agency to act as and perform
the services of Paying Agent/Registrar for the Bonds under this Resolution, and that the Paying
Agent/Registrar will be one entity. The Board reserves the right to, and may, at its option, change
the Paying Agent/Registrar upon not less than 120 days written notice to the Paying Agent/Registrar,
to be effective not later than 60 days prior to the next principal or interest payment date after such
notice. In the event that the entity at any time acting as Paying Agent/Registrar (or its successor by
merger, acquisition, or other method) should resign or otherwise cease to act as such, the Board
covenants that promptly it will appoint a competent and legally qualified bank, trust company,
financial institution, or other agency to act as Paying Agent/Registrar under this Resolution. Upon
any change in the Paying Agent/Registrar, the previous Paying Agent/Registrar promptly shall
transfer and deliver the Registration Books (or a copy thereof), along with all other pertinent books
and records relating to the Bonds, to the new Paying Agent/Registrar designated and appointed by
the Board. Upon any change in the Paying Agent/Registrar, the Board promptly will cause a written
notice thereof to be sent by the new Paying Agent/Registrar to the Authority and to each registered
owner of the Bonds, by United States mail, first-class postage prepaid, which notice also shall give
the address of the new Paying Agent/Registrar. By accepting the position and performing as such,
each Paying Agent/Registrar shall be deemed to have agreed to the provisions of this Resolution,
and a certified copy of this Resolution shall be delivered to each Paying Agent/Registrar.
(h) Book-Entty-Only System. The Bonds issued in exchange for the Bonds initially
issued and delivered to the Purchaser shall be issued in the form of a separate single fully registered
Bond for each of the maturities thereof registered in the name of Cede & Co., as nominee of DTC,
and except as provided in subsection (i) hereof, all of the Outstanding Bonds shall be registered in
the name of Cede & Co., as nominee of DTC. The Authority heretofore has executed a MDTC
Blanket Letter of Representations" in connection with utilizing the DTC Book-Entry-Only System.
With respect to Bonds registered in the name of Cede & Co., as nominee of DTC, the
Authority, the Board and the Paying Agent/Registrar shall have no responsibility or obligation to
any DTC Participant or to any person on behalf of whom such a DTC Participant holds an interest
in the Bonds. Without limiting the immediately preceding sentence, the Authority, the Board and
the Paying Agent/Registrar shall have no responsibility or obligation with respect to: (i) the accuracy
of the records of DTC, Cede & Co. or any DTC Participant with respect to any ownership interest
in the Bonds; (ii) the delivery to any DTC Participant or any other person, other than a Bondholder,
as shown on the Registration Books, of any notice with respect to the Bonds, including any notice
of redemption; or (iii) the payment to any DTC Participant or any other person, other than a
Bondholder, as shown in the Registration Books of any amount with respect to principal of,
premium, if any, or interest on the Bonds. Notwithstanding any other provision of this Resolution
to the contrary but to the extent permitted by law, the Authority, the Board and the Paying
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Agent/Registrar shall be entitled to treat and consider the person in whose name each Bond is
registered in the Registration Books as the absolute owner of such Bond for the purpose of payment
of principal, premium, if any, and interest, with respect to such Bond, for the purposes of registering
transfers with respect to such Bond, and for all other purposes of registering transfers with respect
to such Bonds, and for all other purposes whatsoever. The Paying Agent/Registrar shall pay all
principal of, premium, if any, and interest on the Bonds only to or upon the order of the respective
owners, as shown in the Registration Books as provided in this Resolution, or their respective
attorneys duly authorized in writing, and all such payments shall be valid and effective to fully
satisfy and discharge the Board's obligations with respect to payment of principal of, premium, if
any, and interest on the Bonds to the extent of the sum or sums so paid. No person other than an
owner, as shown in the Registration Books, shall receive a Bond certificate evidencing the obligation
of the Board to make payments of principal, premium, if any, and interest pursuant to this
Resolution. Upon delivery by DTC to the Paying Agent/Registrar of written notice to the effect that
DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the
provisions in this Resolution with respect to interest checks being mailed to the registered owner at
the close of business on the Record Date, the word "Cede & Co." in this Resolution shall refer to
such new nominee of DTC.
(i) Successor Securities Depository; Transfers Outside Book-Entry-Only System. In
the event that the Board or the Paying Agent/Registrar determines that DTC is incapable of
discharging its responsibilities described herein and in the representation letter of the Board to DTC
(as referred in subsection (h) above) or DTC determines to discontinue providing its services with
respect to the Bonds, the Board shall: (i) appoint a successor securities depository, qualified to act
as such under Section 17(a) of the Securities and Exchange Act of 1934, as amended, notify DTC
and DTC Participants of the appointment of such successor securities depository and transfer one
or more separate Bonds to such successor securities depository; or (ii) notify DTC and DTC
Participants of the availability through DTC of Bonds and transfer one or more separate Bonds to
DTC Participants having Bonds credited to their DTC accounts. In such event, the Bonds shall no
longer be restricted to being registered in the Registration Books in the name of Cede & Co., as
nominee of DTC, but may be registered in the name of the successor securities depository, or its
nominee, or in whatever name or names Bondholders transferring or exchanging Bonds shall
designate, in accordance with the provisions of this Resolution.
(j) Payments to Cede & Co. Notwithstanding any other provision of this Resolution to
the contrary, so long as any Bond is registered in the name of Cede & Co., as nominee of DTC, all
payments with respect to principal of, premium, if any, and interest on such Bond and all notices
with respect to such Bond shall be made and given, respectively, in the manner provided in the
representation letter of the Board to DTC.
(k) Notice of Redemption. In addition to the method of providing a notice of redemption
set forth in the FORM OF BONDS, the Paying Agent/Registrar shall give notice of redemption of
Bonds by United States mail, first-class postage prepaid, at least thirty (30) days prior to a
redemption date to each registered securities depository and to any national information service that
disseminates redemption notices. In addition, in the event of a redemption caused by an advance
refunding of the Bonds, the Paying Agent/Registrar shall send a second notice of redemption to the
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persons specified in the immediately preceding sentence at least thirty (30) days but not more than
ninety (90) days prior to the actual redemption date. Any notice sent to the registered securities
depositories or such national information services shall be sent so that they are received at least two
(2) days prior to the general mailing or publication date of such notice. The Paying Agent/Registrar
shall also send a notice of prepayment or redemption to the registered owner of any Bond who has
not sent the Bonds in for redemption sixty (60) days after the redemption date.
Each notice of redemption, whether required in the FORM OF BONDS or in this Section,
shall contain a description of the Bonds to be redeemed including the complete name of the Bonds,
the Series, the date of issue, the interest rate, the maturity date, the CUSIP number, a reference to
the principal amounts of each maturity called for redemption, the publication and mailing date for
the notice, the date of redemption, the redemption price, the name of the Paying Agent/Registrar and
the address at which the Bonds may be redeemed, including a contact person and telephone number.
All redemption payments made by the Paying Agent/Registrar to the registered owners of
the Bonds shall include a CUSIP number relating to each amount paid to such registered owner.
Section 13. FORM OF BONDS. The forms of the Bonds, including the form of the
Authentication Certificate, the form of Assignment, the form of any statement of insurance provided
by the municipal bond insurer in the event insurance is obtained on any of the Bonds, and the form
of Registration Certificate of the Comptroller of Public Accounts of the State of Texas, with respect
to the Bonds initially issued and delivered to the Purchaser pursuant to this Resolution, shall be,
respectively, substantially as set forth in Exhibit B. with such appropriate variations, omissions, or
insertions as are permitted or required by this Resolution.
Section 14. INDIVIDUALS NOT LIABLE. All covenants, stipulations, obligations,
and agreements of the Board contained in this Resolution shall be deemed to be covenants,
stipulations, obligations, and agreements of the Financing System and the Board to the full extent
authorized or permitted by the Constitution and laws of the State of Texas. The Authority agrees
that all covenants, stipulations, obligations, and agreements of the Board contained in this
Resolution shall apply equally to the Authority acting in its capacity as the issuer of the Bonds on
behalf of the University. No covenant, stipulation, obligation, or agreement herein contained shall
be deemed to be a covenant, stipulation, obligation, or agreement of any member of either the
Authority or the Board or agent or employee of either the Authority or the Board in the individual
capacity thereof and neither the respective members of the Authority or the Board, nor any officer
thereof or of any participant shall be liable personally on Parity Obligations when issued, or be
subject to any personal liability or accountability by reason of the issuance thereof.
Section 15. SECURITY FOR THE BONDS. The Bonds are special obligations of the
Board payable from and secured solely by the Pledged Revenues pursuant to this Resolution. The
Pledged Revenues are hereby pledged, subject to the liens securing the Prior Encumbered
Obligations, to the payment of the principal of, premium, if any, and interest on the Bonds as the
same shall become due and payable. The Board agrees to pay the principal of, premium, if any, and
the interest on the Bonds when due, whether by reason of maturity or redemption.
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Section 16. PAYMENTS. Semiannually on or before each principal or interest payment
date while any of the Bonds are outstanding and unpaid, commencing on the first interest payment
date for the Bonds as provided in Schedule I attached to this Resolution, the Board shall make
available to the Paying Agent/Registrar, money sufficient to pay such interest on and such principal
of the Bonds as will accrue or mature, or be subject to mandatory redemption prior to maturity, on
such principal, redemption, or interest payment date. The Paying Agent/Registrar shall cancel all
paid Bonds and shall furnish the Board with an appropriate certificate of cancellation.
Section 17. DAMAGED, MUTILATED, LOST, STOLEN, OR DESTROYED
BONDS, (a) Replacement Bonds. In the event any outstanding Bond is damaged, mutilated, lost,
stolen, or destroyed, the Paying Agent/Registrar shall cause to be printed, executed, and delivered,
a new bond of the same Series, principal amount, maturity, and interest rate, and in the same form,
as the damaged, mutilated, lost, stolen, or destroyed Bond, in replacement for such Bond in the
manner hereinafter provided.
(b) Application for Replacement Bonds. Application for replacement of damaged,
mutilated, lost, stolen, or destroyed Bonds shall be made to the Paying Agent/Registrar. In every
case of loss, theft, or destruction of a Bond, the applicant for a replacement bond shall furnish to the
Authority, the Board and the Paying Agent/Registrar such security or indemnity as may be required
by them to save each of them harmless from any loss or damage with respect thereto. Also, in every
case of loss, theft, or destruction of a Bond, the applicant shall furnish to the Authority, the Board
and the Paying Agent/Registrar evidence to their satisfaction of the loss, theft, or destruction of such
Bond, as the case may be. In every case of damage or mutilation of a Bond, the applicant shall
surrender to the Paying Agent/Registrar for cancellation the Bond so damaged or mutilated.
(c) Payment in Lieu of Replacement. Notwithstanding the foregoing provisions of this
Section, in the event any such Bond shall have matured, and no default has occurred which is then
continuing in the payment of the principal of, redemption premium, if any, or interest on the Bond,
the Board, or the Authority acting on behalf of the Board, may authorize the payment of the same
(without surrender thereof except in the case of a damaged or mutilated Bond) instead of issuing a
replacement Bond, provided security or indemnity is furnished as above provided in this Section.
(d) Charge for Issuing Replacement Bonds. Prior to the issuance of any replacement
bond, the Paying Agent/Registrar shall charge the owner of such Bond with all legal, printing, and
other expenses in connection therewith. Every replacement bond issued pursuant to the provisions
of this Section by virtue of the fact that any Bond is lost, stolen, or destroyed shall constitute a
contractual obligation of the Board whether or not the lost, stolen, or destroyed Bond shall be found
at any time, or be enforceable by anyone, and shall be entitled to all the benefits of this Resolution
equally and proportionately with any and all other Bonds duly issued under this Resolution.
(e) Authority for Issuing Replacement Bonds. In accordance with Chapter 1206, Texas
Government Code, this Section shall constitute authority for the issuance of any such replacement
bond without the necessity of further action by the Authority, the Board or any other body or person,
and the duty of the replacement of such Bonds is hereby authorized and imposed upon the Paying
Agent/Registrar, and the Paying Agent/Registrar shall authenticate and deliver such Bonds in the
F:\WDOX\CLIENTS\009425\00011 \10074808. WPD / 3 19
form and manner and with the effect, as provided in Section 12(f) of this Resolution for Bonds
issued in exchange and replacement for other Bonds.
Section 18. REMEDIES. Any owner of Parity Obligations in the event of default in
connection with any covenant contained herein or in any resolution adopted hereafter authorizing
the issuance of Parity Obligations, or default in the payment of said obligations, or of any interest
due thereon, or other costs and expenses related thereto, may require the Authority, the Board, their
respective officials and employees, and any appropriate official of the State of Texas, to carry out,
respect, or enforce the covenants and obligations of this Resolution by all legal and equitable means,
including specifically, but without limitation, the use and filing of mandamus proceedings in any
court of competent jurisdiction against the Authority, the Board, their respective officials and
employees, or any appropriate official of the State of Texas. Any delay or omission to exercise any
right or power accruing upon any default shall not impair any such right or power nor be construed
to be a waiver of any such default or acquiescence therein, and every such right and power may be
exercised from time to time and as often as may be deemed expedient. Acceleration of the
maturities of the Bonds shall not be an available remedy.
Section 19. DEFEASANCE OF OBLIGATIONS, (a) Any Bond and the interest
thereon shall be deemed to be paid, retired and no longer Outstanding (a "Defeased Bond") within
the meaning of this Resolution, except to the extent provided in subsections (c) and (e) of this
Section, when payment of the principal of such Bond, plus interest thereon to the due date or dates
(whether such due date or dates be by reason of maturity, upon redemption, or otherwise) either: (i)
shall have been made or caused to be made in accordance with the terms thereof (including the
giving of any required notice of redemption); or (ii) shall have been provided for on or before such
due date by irrevocably depositing with or making available to the Paying Agent/Registrar for such
payment: (1) lawful money of the United States of America sufficient to make such payment; (2)
Defeasance Securities, certified by an independent public accounting firm of national reputation to
mature as to principal and interest in such amounts and at such times as will ensure the availability,
without reinvestment, of sufficient money to provide for such payment and when proper
arrangements have been made by the Authority with the Paying Agent/Registrar for the payment of
its services until all Defeased Bonds shall have become due and payable; or (3) any combination of
(1) and (2). At such time as a Bond shall be deemed to be a Defeased Bond hereunder, as aforesaid,
such Bond and the interest thereon shall no longer be secured by, payable from, or entitled to the
benefits of, the revenues herein pledged as provided in this Resolution, and such principal and
interest shall be payable solely from such money or Defeasance Securities.
(b) The deposit under clause (ii) of subsection (a) shall be deemed a payment of a Bond
as aforesaid when proper notice of redemption of such Bonds shall have been given, in accordance
with this Resolution. Any money so deposited with the Paying Agent/Registrar as provided in this
Section may at the written discretion of the Authority also be invested in Defeasance Securities,
maturing in the amounts and at the times as hereinbefore set forth, and all income from all
Defeasance Securities in possession of the Paying Agent/Registrar pursuant to this Section which
is not required for the payment of such Bond and premium, if any, and interest thereon with respect
to which such money has been so deposited, shall be turned over to the Authority.
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(c) Notwithstanding any provision of any other Section of this Resolution which may
be contrary to the provisions of this Section, all money or Defeasance Securities set aside and held
in trust pursuant to the provisions of this Section for the payment of principal of the Bonds and
premium, if any, and interest thereon, shall be applied to and used solely for the payment of the
particular Bonds and premium, if any, and interest thereon, with respect to which such money or
Defeasance Securities have been so set aside in trust. Until all Defeased Bonds shall have become
due and payable, the Paying Agent/Registrar shall perform the services of Paying Agent/Registrar
for such Defeased Bonds the same as if they had not been defeased, and the Authority shall make
proper arrangements to provide and pay for such services as required by this Resolution.
(d) Notwithstanding anything elsewhere in this Resolution, if money or Defeasance
Securities have been deposited or set aside with the Paying Agent/Registrar pursuant to this Section
for the payment of Bonds and such Bonds shall not have in fact been actually paid in full, no
amendment of the provisions of this Section shall be made without the consent of the registered
owner of each Bond affected thereby.
(e) Notwithstanding the provisions of subsection (a) immediately above, to the extent
that, upon the defeasance of any Defeased Bond to be paid at its maturity, the Authority retains the
right under Texas law to later call that Defeased Bond for redemption in accordance with the
provisions of the resolution authorizing its issuance, the Authority may call such Defeased Bond for
redemption upon complying with the provisions of Texas law and upon the satisfaction of the
provisions of subsection (a) immediately above with respect to such Defeased Bond as though it was
being defeased at the time of the exercise of the option to redeem the Defeased Bond and the effect
of the redemption is taken into account in determining the sufficiency of the provisions made for the
payment of the Defeased Bond.
(f) In the event that the Authority elects to defease less than all of the principal amount
of Bonds of a maturity, the Paying Agent/Registrar shall select, or cause to be selected, such amount
of Bonds by such random method as it deems fair and appropriate.
Section 20. AMENDMENT OF RESOLUTION, (a) Amendment Without Consent.
This Resolution and the rights and obligations of the Authority, the Board and of the owners of the
Outstanding Parity Obligations may be modified or amended at any time without notice to or the
consent of any owner of the Outstanding Parity Obligations, solely for any one or more of the
following purposes:
(i) To add to the covenants and agreements of the Board or the Authority
contained in this Resolution, other covenants and agreements thereafter to be observed, or
to surrender any right or power reserved to or conferred upon the Board or the Authority in
this Resolution;
(ii) To cure any ambiguity or inconsistency, or to cure or correct any defective
provisions contained in this Resolution, upon receipt by the Board and the Authority of an
opinion of Bond Counsel, that the same is needed for such purpose, and will more clearly
express the intent of this Resolution;
F:\WDOX\CLIENTS\009425\00011U0074808.WPD / 3 21
(iii) To supplement the security for the Parity Obligations, including, but not by
way of limitation, to provide for the addition of new institutions and agencies to the
Financing System or to clarify the provisions regarding the University as a Participant in the
Financing System; provided, however, if the definition of Pledged Revenues is amended in
any manner which results in the pledge of additional resources, the terms of such amendment
may limit the amount of such additional pledge and the manner, extent, and duration of such
additional pledge all as set forth in such amendment;
(iv) To make any changes or amendments requested by any bond rating agency
then rating or requested to rate Parity Obligations, as a condition to the issuance or
maintenance of a rating, which changes or amendments do not, in the judgment of the Board
and the Authority, materially adversely affect the interests of the owners of the Outstanding
Parity Obligations;
(v) To make such changes, modifications or amendments as may be necessary
or desirable, which shall not adversely affect the interests of the owners of the Outstanding
Parity Obligations, in order, to the extent permitted by law, to facilitate the economic and
practical utilization of Credit Agreements with respect to the Parity Obligations;
(vi) To make such other changes in the provisions hereof as the Board and the
Authority may deem necessary or desirable and which shall not, in the judgment of the
Board and the Authority, materially adversely affect the interests of the owners of
Outstanding Parity Obligations; or
(vii) To make such changes or amendments as contemplated by Section 24(c)(v)
of this Resolution in order to comply with the Rule.
Notice of any such amendment may be published by the Board in the manner described in subsection
(c) of this Section; provided, however, that the publication of such notice shall not constitute a
condition precedent to the adoption of such amendatory resolution and the failure to publish such
notice shall not adversely affect the implementation of such amendment as adopted pursuant to such
amendatory resolution.
(b) Amendments With Consent. Subject to the other provisions of this Resolution, the
owners of Outstanding Parity Obligations aggregating a majority in Outstanding Principal Amount
shall have the right from time to time to approve any amendment to this Resolution, other than
amendments described in subsection (a) of this Section, which may be deemed necessary or
desirable by the Board and the Authority; provided, however, that nothing herein contained shall
permit or be construed to permit, without the approval of the owners of all of the Outstanding Parity
Obligations, the amendment of the terms and conditions in this Resolution so as to:
(1) Grant to the owners of any Outstanding Parity Obligations a priority over the owners
of any other Outstanding Parity Obligations;
(2) Materially adversely affect the rights of the owners of less than all Parity Obligations
F:\WDOX\CLIENTS\009425\0001 l\10074808.WPD / 3 22
then Outstanding;
(3) Change the minimum percentage of the Outstanding Principal Amount necessary for
consent to such amendment;
(4) Make any change in the maturity of the Outstanding Bonds;
(5) Reduce the rate of interest borne by Outstanding Bonds;
(6) Reduce the amount of the principal payable on Outstanding Bonds;
(7) Modify the terms of payment of principal of or interest on the Outstanding Bonds,
or impose any conditions with respect to such payment; or
(8) Adversely affect the tax exempt status of the interest on the Outstanding Bonds to
the owners thereof.
(c) Notice. If at any time this Resolution is to be amended pursuant to the provisions of
subsection (b) of this Section, the Board shall cause notice of the proposed amendment to be
published in a financial newspaper or journal of general circulation in The City of New York, New
York, once during each calendar week for at least two successive calendar weeks. Such notice shall
briefly set forth the nature of the proposed amendment and shall state that a copy thereof is on file
at the principal office of each Registrar for the Parity Obligations for inspection by all owners of
Parity Obligations. Such publication is not required, however, if the Board gives or causes to be
given such notice in writing, by certified mail, to each owner of Parity Obligations. Such
publication is not required with respect to amendments to this Resolution effected pursuant to the
provisions of subsection (a) of this Section.
(d) Receipt of Consents. Whenever at any time not less than thirty (30) days, and within
one year, from the date of the first publication of said notice or other service of written notice of the
proposed amendment the Board shall receive an instrument or instruments executed by all of the
owners or the owners of at least a majority in Outstanding Principal Amount, as appropriate, which
instrument or instruments shall refer to the proposed amendment described in said notice and which
specifically consent to and approve such amendment in substantially the form of the copy thereof
on file as aforesaid, the Board may adopt the amendatory resolution in substantially the same form.
(e) Effect of Amendments. Upon the adoption of any resolution to amend this
Resolution pursuant to the provisions of this Section, this Resolution shall be deemed to be amended
in accordance with the amendatory resolution, and the respective rights, duties, and obligations of
the Board, the Authority and all the owners of then Outstanding Parity Obligations and all future
Parity Obligations shall thereafter be determined, exercised, and enforced under this Resolution, as
amended.
(f) Consent Irrevocable. Any consent given by any owner of Parity Obligations
pursuant to the provisions of this Section shall be irrevocable for a period of six months from the
F:\WDOX\CLIENTS\009425\00011\10074808. WPD / 3 23
date of the first publication or other service of the notice provided for in this Section, and shall be
conclusive and binding upon all future owners of the same Parity Obligations during such period.
Such consent may be revoked at any time after six months from the date of the first publication of
such notice by the owner who gave such consent, or by a successor in title, by filing notice thereof
with the Registrar for such Parity Obligations, the Authority and the Board, but such revocation shall
not be effective if the owners of a majority in Outstanding Principal Amount, prior to the attempted
revocation, consented to and approved the amendment.
(g) Ownership. For the purpose of this Section, the ownership and other matters relating
to all Parity Obligations shall be determined by the Registration Books maintained by the Registrar.
Section 21. COVENANTS REGARDING TAX-EXEMPTION, (a) Covenants. The
Board and the Authority covenant to take any action necessary to assure, or refrain from any action
which would adversely affect, the treatment of the Bonds as obligations described in section 103 of
the Code, the interest on which is not includable in the "gross income" of the holder for purposes
of federal income taxation. The Authority understands, and the Board agrees, that all costs
associated with satisfying the below covenants including, but not by way of limitation, the costs
incurred in respect to compliance with clause (8) below, shall be borne by the Board. In furtherance
thereof, the Board and the Authority covenant as follows:
(1) to take any action to assure that no more than 10 percent of the proceeds of
the Bonds or the projects financed therewith (less amounts deposited to a reserve fund, if
any) are used for any "private business use," as defined in section 141(b)(6) of the Code or,
if more than 10 percent of the proceeds or the projects financed therewith are so used, such
amounts, whether or not received by the Board, with respect to such private business use,
do not, under the terms of this Resolution or any underlying arrangement, directly or
indirectly, secure or provide for the payment of more than 10 percent of the debt service on
the Bonds, in contravention of section 141(b)(2) of the Code;
(2) to take any action to assure that in the event that the "private business use"
described in subsection (1) hereof exceeds 5 percent of the proceeds of the Bonds or the
projects financed therewith (less amounts deposited into a reserve fund, if any) then the
amount in excess of 5 percent is used for a "private business use" which is "related" and not
"disproportionate," within the meaning of section 141 (b)(3) of the Code, to the governmental
use;
(3) to take any action to assure that no amount which is greater than the lesser
of $5,000,000, or 5 percent of the proceeds of the Bonds (less amounts deposited into a
reserve fluid, if any) is directly or indirectly used to finance loans to persons, other than state
or local governmental units, in contravention of section 141(c) of the Code;
(4) to refrain from taking any action which would otherwise result in the Bonds
being treated as "private activity bonds" within the meaning of section 141 (b) of the Code;
(5) to refrain from taking any action that would result in the Bonds being
F:\WDOX\CLIENTS\009425\00011\10074808.WPD / 3 24
"federally guaranteed" within the meaning of section 149(b) of the Code;
(6) to refrain from using any portion of the proceeds of the Bonds, directly or
indirectly, to acquire or to replace funds which were used, directly or indirectly, to acquire
investment property (as defined in section 148(b)(2) of the Code) which produces a
materially higher yield over the term of the Bonds, other than investment property acquired
with-
(A) proceeds of the Bonds invested for a reasonable temporary period of
3 years or less or, in the case of a refunding bond, for a period of 30 days or less until
such proceeds are needed for the purpose for which the Bonds are issued,
(B) amounts invested in a bona fide debt service fund, within the meaning
of section 1.148-l(b) of the Treasury Regulations, and
(C) amounts deposited in any reasonably required reserve or replacement
fund to the extent such amounts do not exceed 10 percent of the proceeds of the
Bonds;
(7) to otherwise restrict the use of the proceeds of the Bonds or amounts treated
as proceeds of the Bonds, as may be necessary, so that the Bonds do not otherwise
contravene the requirements of section 148 of the Code (relating to arbitrage) and, to the
extent applicable, section 149(d) of the Code (relating to advance refundings); and
(8) to pay to the United States of America at least once during each five-year
period (beginning on the date of delivery of the Bonds) an amount that is at least equal to 90
percent of the "Excess Earnings," within the meaning of section 148(f) of the Code and to
pay to the United States of America, not later than 60 days after the Bonds have been paid
in full, 100 percent of the amount then required to be paid as a result of Excess Earnings
under section 148(f) of the Code.
(b) Rebate Fund. In order to facilitate compliance with the above covenant (8), a
"Rebate Fund" is hereby established by the Board for the sole benefit of the United States of
America, and such fund shall not be subject to the claim of any other person, including without
limitation the registered owners of the Bonds. The Rebate Fund is established for the additional
purpose of compliance with section 148 of the Code. The Rebate Fund shall be maintained and
administered at the direction of the Board.
(c) Proceeds. The Board understands that the term "proceeds" includes "disposition
proceeds" as defined in the Treasury Regulations and, in the case of refunding bonds, transferred
proceeds (if any) and proceeds of the refunded bonds expended prior to the date of issuance of the
Bonds. It is the understanding of the Board that the covenants contained herein are intended to
assure compliance with the Code and any regulations or rulings promulgated by the U.S. Department
of the Treasury pursuant thereto. In the event that regulations or rulings are hereafter promulgated
which modify or expand provisions of the Code, as applicable to the Bonds, the Board will not be
F:\WDOX\CLIENTS\009425\00011\10074808.WPD / 3 25
required to comply with any covenant contained herein to the extent that such failure to comply, in
the opinion of nationally recognized bond counsel, will not adversely affect the exemption from
federal income taxation of interest on the Bonds under section 103 of the Code. In the event that
regulations or rulings are hereafter promulgated which impose additional requirements which are
applicable to the Bonds, the Board agrees to comply with the additional requirements to the extent
necessary, in the opinion of nationally recognized bond counsel, to preserve the exemption from
federal income taxation of interest on the Bonds under section 103 of the Code. In furtherance of
the foregoing, the Chair of the Board, the Chair of the Authority, the Executive Director of the
Authority, and the Designated Financial Officer each may execute any documents, certificates or
reports required by the Code and to make such elections, on behalf of the Board, which may be
permitted by the Code as are consistent with the purpose for the issuance of the Bonds.
(d) Allocation Of, and Limitation On, Expenditures for the Project. The Board
covenants to account for on its books and records the expenditure of proceeds from the sale of the
Bonds and any investment earnings thereon to be used for the purposes described in Section 9 of this
Resolution (the "Project") in accordance with the requirements of the Code. The Board recognizes
that in order for the proceeds to be considered used for the reimbursement of costs, the proceeds
must be allocated to expenditures within 18 months of the later of the date that: (1) the expenditure
on a Project is made; or (2) each such Project is completed; but in no event later than three years
after the date on which the original expenditure is paid. The foregoing notwithstanding, the Board
recognizes that in order for proceeds to be expended under the Code, the sale proceeds or investment
earnings must be expended no more than 60 days after the earlier of: (1) the fifth anniversary of the
date of delivery of the Bonds; or (2) the date the Bonds are retired. The Board agrees to obtain the
advise of nationally-recognized bond counsel if such expenditure fails to comply with the foregoing
to assure that such expenditure will not adversely affect the tax-exempt status of the Bonds. For
purposes of this subsection, the Board shall not be obligated to comply with this covenant if it
obtains an opinion of nationally-recognized bond counsel to the effect that such failure to comply
will not adversely affect the excludability for federal income tax purposes from gross income of the
interest. The Board shall notify the Authority in writing promptly after it receives or is made aware
of any such opinion.
(e) Disposition of Project. The Board covenants that the property constituting a Project
will not be sold or otherwise disposed in a transaction resulting in the receipt by the Board of cash
or other compensation, unless the Board obtains an opinion of nationally-recognized bond counsel
substantially to the effect that such sale or other disposition will not adversely affect the tax-exempt
status of the Bonds. For purposes of this subsection, the Board shall not be obligated to comply with
this covenant if it obtains an opinion of nationally-recognized bond counsel to the effect that such
failure to comply will not adversely affect the excludability for federal income tax purposes from
gross income of the interest. The Board shall notify the Authority in writing promptly after it
receives or is made aware of any such opinion.
Section 22. PRIOR REDEMPTION, (a) Optional Redemption. The Bonds maturing
on and after October 15, 2016 are subject to redemption prior to maturity, at the option of the
Authority, on October 15, 2015 or any date thereafter, in whole or in part (but if less than all the
Bonds of a single maturity are called for redemption, those bonds called shall be selected by lot or
F:\WDOX\CLIENTS\009425\00011\10074808. WPD / 3 26
other customary random method by the Paying Agent/Registrar), for a redemption price equal to the
principal amount to be redeemed plus accrued interest to the date fixed for redemption.
(b) Mandatory Sinking Fund Redemption. The Bonds maturing on October 15, 20
and October 15,20 (the "Term Bonds") are subject to mandatory sinking fund redemption prior
to their scheduled maturity, and will be redeemed by the Authority, in part at a redemption price
equal to the principal amount to be redeemed plus accrued interest from the most recent interest
payment date to the date of redemption, on the date and in the principal amounts shown in the
following schedule:
Term Bonds Maturing October 15, 20
Redemption Date Principal Amount
October 15,20
October 15,20
October 15, 20 *
*Final Maturity
Term Bonds Maturing October 15, 20_
Redemption Date Principal Amount
October 15, 20
October 15,20
October 15, 20 *
*Final Maturity
Section 23. OTHER REPRESENTATION AND COVENANTS. The Authority and
the Board further covenant or warrant as follows:
(a) The Authority is a duly organized and existing political subdivision of the State of
Texas under the Constitution and laws of the State of Texas.
(b) The Authority is duly authorized under the laws of the State of Texas to issue the
Bonds; all action on its part of the creation and issuance of the Bonds has been duly and effectively
F:\WDOX\CLIENTS\009425\00011\10074808.WPD / 3 27
taken; and the Bonds in the hands of the Holders thereof are and will be valid and enforceable
obligations of the Authority in accordance with their terms.
(c) The Bonds upon issuance and approval by the Attorney General of the State of Texas
will be legal, valid and binding obligations of the Authority, subject to bankruptcy, insolvency, or
other laws affecting creditors; rights generally and as may be affected by matters involving the
exercise of equitable or judicial discretion.
(d) The Bonds and Bond documents do not conflict with other agreements or obligations
binding on the University.
(e) No litigation is pending that would adversely affect the financial condition of the
Authority, and no litigation of any nature has been filed or is now pending to restrain or enjoin the
issuance or delivery of the Bonds, that would affect the provisions made for the payment or security
of the Bonds, or that in any manner questions the proceedings or authority concerning the issuance
of the Bonds.
(f) There has been no default or non-appropriation of any obligations of the Authority.
Section 24. CONTINUING DISCLOSURE, (a) Annual Reports, (i) The Board shall
provide annually to each NRMSIR and any SID, within six months after the end of each fiscal year
ending in or after 2005, financial information and operating data of the general type included in the
final Official Statement authorized by Section 10 hereof, being the information described in
Exhibit C hereto. Any financial statements so to be provided shall be prepared in accordance with
the accounting principles described in Exhibit C hereto, or such other accounting principles as the
Board may be required to employ from time to time pursuant to state law or regulation. If the Board
commissions an audit of such statements and the audit is completed within the period during which
they must be provided, a copy of such audit also shall be provided in accordance with the Rule. If
any such audit commissioned by the Board of such financial statements is not complete within such
period, then the Board shall provide unaudited financial statements and audited financial statements
for the applicable fiscal year to each NRMSIR and any SID, when and if the audit report on such
statements become available.
(ii) If the Board changes the fiscal year of the University, it will notify each NRMSIR and
any SID of the change (and of the date of the new fiscal year end) prior to the next date by which
the Board otherwise would be required to provide financial information and operating data pursuant
to this Section. The financial information and operating data to be provided pursuant to this Section
may be set forth in full in one or more documents or may be included by specific reference to any
document (including an official statement or other offering document, if it is available from the
MSRB) that theretofore has been provided to each NRMSIR and any SID or filed with the SEC.
(b) Material Event Notices. The Board shall notify any SID and either each NRMSIR or
the MSRB, in a timely manner, of any of the following events with respect to the Bonds, if such
event is material within the meaning of the federal securities laws:
F:\WDOX\CLIENTS\009425\00011\10074808. WPD / 3 28
1. Principal and interest payment delinquencies;
2. Non-payment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions or events affecting the tax-exempt status of the Bonds;
7. Modifications to rights of holders of the Bonds;
8. Bond calls;
9. Defeasances;
10. Release, substitution, or sale of property securing repayment of the Bonds;
and
11. Rating changes.
The Board shall notify any SID and either each NRMSIR or the MSRB, in a timely manner, of any
failure by the Board to provide financial information or operating data in accordance with subsection
(a) of this Section by the time required by such subsection.
(c) Limitations, Disclaimers, and Amendments, (i) The Board shall be obligated to
observe and perform the covenants specified in this Section for so long as, but only for so long as,
the Board remains an "obligated person" with respect to the Bonds within the meaning of the Rule,
except that the Board in any event will give notice of any deposit made in accordance with this
Resolution or applicable law that causes the Bonds no longer to be Outstanding.
(ii) The provisions of this Section are for the sole benefit of the registered owners and
beneficial owners of the Bonds, and nothing in this Section, express or implied, shall give any
benefit or any legal or equitable right, remedy, or claim hereunder to any other person. The Board
undertakes to provide only the financial information, operating data, financial statements, and
notices which it has expressly agreed to provide pursuant to this Section and does not hereby
undertake to provide any other information that may be relevant or material to a complete
presentation of the Board's financial results, condition, or prospects or hereby undertake to update
any information provided in accordance with this Section or otherwise, except as expressly provided
herein. The Board does not make any representation or warranty concerning such information or
its usefulness to a decision to invest in or sell Bonds at any future date.
(iii) UNDER NO CIRCUMSTANCES SHALL THE BOARD BE LIABLE TO THE
REGISTERED OWNER OR BENEFICIAL OWNER OF ANY BOND OR ANY OTHER
PERSON, IN CONTRACT OR TORT, FOR DAMAGES RESULTING IN WHOLE OR IN PART
FROM ANY BREACH BY THE BOARD WHETHER NEGLIGENT OR WITHOUT FAULT ON
ITS PART, OF ANY COVENANT SPECIFIED IN THIS SECTION, BUT EVERY RIGHT AND
REMEDY OF ANY SUCH PERSON, IN CONTRACT OR TORT, FOR OR ON ACCOUNT OF
ANY SUCH BREACH SHALL BE LIMITED TO AN ACTION FOR MANDAMUS OR
SPECIFIC PERFORMANCE.
(iv) No default by the Board in observing or performing its obligations under this Section
shall comprise a breach of or default under the Resolution for purposes of any other provision of this
F:\WDOX\CLIENTS\009425\00011U0074808.WPD / 3 29
Resolution. Nothing in this Section is intended or shall act to disclaim, waive, or otherwise limit
the duties of the Board under federal and state securities laws.
(v) The provisions of this Section may be amended by the Board from time to time to adapt
to changed circumstances that arise from a change in legal requirements, a change in law, or a
change in the identity, nature, status, or type of operations of the Board, but only if: (1) the
provisions of this Section, as so amended, would have permitted an underwriter to purchase or sell
Bonds in the primary offering of the Bonds in compliance with the Rule, taking into account any
amendments or interpretations of the Rule since such offering as well as such changed circumstances
and; (2) either: (A) the registered owners of a majority in aggregate principal amount (or any greater
amount required by any other provision of this Resolution that authorizes such an amendment) of
the Outstanding Bonds consent to such amendment; or (B) a person that is unaffiliated with the
Board (such as nationally recognized bond counsel) determined that such amendment will not
materially impair the interest of the registered owners and beneficial owners of the Bonds. If the
Board so amends the provisions of this Section, it shall include with any amended financial
information or operating data next provided in accordance with subsection (a) of this Section an
explanation, in narrative form, of the reason for the amendment and of the impact of any change in
the type of financial information or operating data so provided. The Board may also amend or repeal
the provisions of this continuing disclosure agreement if the SEC amends or repeals the applicable
provision of the Rule or a court of final jurisdiction enters judgment that such provisions of the Rule
are invalid, but only if and to the extent that the provisions of this sentence would not prevent an
underwriter from lawfully purchasing or selling Bonds in the primary offering of the Bonds.
Section 25. RESOLUTION TO CONSTITUTE A CONTRACT; EQUAL
SECURITY. In consideration of the acceptance of the Bonds, the issuance of which is authorized
hereunder, by those who shall hold the same from time to time, this Resolution shall be deemed to
be and shall constitute a contract between the Authority, the Board and the Holders from time to
time of the Bonds and the pledge made in this Resolution by the Board and the covenants and
agreements set forth in this Resolution to be performed by the Authority and the Board shall be for
the equal and proportionate benefit, security, and protection of all Holders, without preference,
priority, or distinction as to security or otherwise of any of the Bonds authorized hereunder over any
of the others by reason of time of issuance, sale, or maturity thereof or otherwise for any cause
whatsoever, except as expressly provided in or permitted by this Resolution.
Section 26. SEVERABILITY OF INVALID PROVISIONS. If any one or more of the
covenants, agreements, or provisions herein contained shall be held contrary to any express
provisions of law or contrary to the policy of express law, though not expressly prohibited, or
against public policy, or shall for any reason whatsoever be held invalid, then such covenants,
agreements, or provisions shall be null and void and shall be deemed separable from the remaining
covenants, agreements, or provisions and shall in no way affect the validity of any of the other
provisions hereof or of the Bonds issued hereunder.
Section 27. PAYMENT AND PERFORMANCE ON BUSINESS DAYS. Except as
provided to the contrary in the FORM OF BONDS, whenever under the terms of this Resolution or
the Bonds, the performance date of any provision hereof or thereof, including the payment of
F:\WDOX\CLIENTS\009425\00011M0074808.WPD / 3 30
principal of or interest on the Bonds, shall occur on a day other than a Business Day, then the
performance thereof, including the payment of principal of and interest on the Bonds, need not be
made on such day but may be performed or paid, as the case may be, on the next succeeding
Business Day with the same force and effect as if made on the date of performance or payment.
Section 28. LIMITATION OF BENEFITS WITH RESPECT TO THE
RESOLUTION. With the exception of the rights or benefits herein expressly conferred, nothing
expressed or contained herein or implied from the provisions of this Resolution or the Bonds is
intended or should be construed to confer upon or give to any person other than the Authority, the
Board, the Holders, and the Paying Agent/Registrar, any legal or equitable right, remedy, or claim
under or by reason of or in respect to this Resolution or any covenant, condition, stipulation,
promise, agreement, or provision herein contained. This Resolution and all of the covenants,
conditions, stipulations, promises, agreements, and provisions hereof are intended to be and shall
be for and inure to the sole and exclusive benefit of the Authority, the Board, the Holders, and the
Paying Agent/Registrar as herein and therein provided.
Section 29. CUSTODY, APPROVAL, BOND COUNSEL'S OPINION, CUSIP
NUMBERS, PREAMBLE AND INSURANCE. The Executive Director of the Authority is hereby
authorized to have control of the Bonds issued hereunder and all necessary records and proceedings
pertaining to the Bonds pending their delivery and approval by the Attorney General of the State of
Texas. The Executive Director of the Authority is hereby authorized, to the extent deemed
necessary or advisable thereby, in the discretion thereof, to request that the Attorney General
approve the Bonds as permitted by Chapter 1202, in which case the Executive Director of the
Authority also is authorized to request the Comptroller of Public Accounts register the Bonds, and
to cause an appropriate legend reflecting such approval and registration to appear on the Bonds and
the substitute Bonds. The approving legal opinion of Bond Counsel and the assigned CUSIP
numbers may be printed on the Bonds and on any Bonds issued and delivered in exchange or
replacement of any Bond, but the presence or absence thereof shall not affect the legality or
enforceability of the Bonds, and shall be solely for the convenience and information of the registered
owners of the Bonds. The preamble to this Resolution is hereby adopted and made a part of this
Resolution for all purposes. If insurance is obtained on any of the Bonds, the Bonds shall bear, as
appropriate and applicable, a legend concerning insurance as provided by the municipal bond
insurance company issuing any such insurance.
Section 30. FURTHER PROCEDURES. The Chair of the Board, the Chair of the
Authority, the Executive Director of the Authority, the Designated Financial Officer, and all other
officers, employees, and agents of the Authority and the University, and each of them, shall be and
they are hereby expressly authorized, empowered, and directed from time to time and at any time
to do and perform all such acts and things and to execute, acknowledge, and deliver in the name and
under the corporate seal and on behalf of the Authority or the Board, as appropriate, all such
instruments, whether or not herein mentioned, as may be necessary or desirable in order to carry out
the terms and provisions of this Resolution, the Bonds, the sale and delivery of the Bonds and fixing
all details in connection therewith, and to approve any Official Statement, or supplements thereto,
in connection with the Bonds. The Designated Financial Officer specifically is authorized to execute
Schedule I attached to this Resolution for the purposes described in Section 10(a) of this Resolution.
F:\WDOX\CLIENTS\009425\00011\10074808. WPD / 3 31
Section 31. REPEAL OF CONFLICTING RESOLUTIONS. All resolutions and all
parts of any resolutions which are in conflict or inconsistent with this Resolution are hereby repealed
and shall be of no further force or effect to the extent of such conflict or inconsistency.
Section 32. REFERENCES TO AUTHORITY. By operation of Texas law including,
but not by way of limitation, the TPFA Act and the Texas Education Code being amended by the
Texas legislature, should the Authority no longer be charged with the duty and exclusive authority
to act on behalf of the University in issuing bonds on its behalf, all references to the Authority in this
Resolution shall be null and void and of no effect. Furthermore, should the Authority no longer be
charged with the duty and exclusive authority to act on behalf of the University in issuing bonds on
its behalf, the Authority shall be deemed to have discharged all of its duties and responsibilities to
the University under this Resolution, and all such duties and responsibilities shall be assumed by
the University.
Section 33. PERFECTION OF PLEDGE. Chapter 1208, Government Code, applies
to the issuance of the Bonds and the pledge of the Pledged Revenues granted under Section 2 of this
Resolution, and such pledge is therefore valid, effective and perfected. If Texas law is amended at
any time while the Bonds are outstanding and unpaid such that the pledge of the Pledged Revenues
under Section 2 of this Resolution is to be subject to the filing requirements of Chapter 9, Business
& Commerce Code, then in order to preserve to the registered owners of the Bonds the perfection
of the security interest in said pledge, the Authority agrees to take such measures as it determines
are reasonable and necessary under Texas law to comply with the applicable provisions of Chapter
9, Business & Commerce Code and enable a filing to perfect the security interest in said pledge to
occur.
Section 34. BOND INSURANCE. In the event the Bonds are qualified for municipal
bond insurance and the winning bidder for the Bonds wishes to purchase such municipal bond
insurance for the benefit of the holders of the Bonds, the cost thereof will be paid by the winning
bidder. The municipal bond insurer shall be deemed to be the sole holder of the Bonds insured by
it for the purpose of exercising any voting right or privilege or giving any consent or direction or
taking any other action that the holders of the Bonds insured by it are entitled to take pursuant to
Sections 18 and 20 of this Resolution.
Section 35. PUBLIC NOTICE. It is hereby found and determined that each of the
officers and members of the Authority and the Board was duly and sufficiently notified officially
and personally, in advance, of the time, place, and purpose of their respective meetings at which this
Resolution was adopted, and that this Resolution would be introduced and considered for adoption
at said meetings; and that said meetings were open to the public, and public notice of the time, place,
and purpose of said meetings was given, all as required by Chapter 551, Texas Government Code.
In addition, the meeting of the Board was held as a telephone conference call pursuant to Section
551.121, Texas Government Code, and that it was necessary to convene said meeting immediately
to finalize the terms and conditions relating to the sale of the Bonds at a time when it was found to
be difficult, and possibly impossible, to convene a quorum of the Board in one location.
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F:\WDOX\CLIENTS\009425\00011\10074808. WPD / 3 33
SCHEDULE I
$
Texas Public Finance Authority Stephen F. Austin State University
Revenue Financing System Revenue Bonds, Series 2005
Terms Bonds
Principal Maturity Interest
Amount October 15 Rate
f:\wdox\clients\oo9425\oooi i\i 0074808.wpd/ 3 Schedule I - Page 1
The Bonds will bear interest from the date set forth above and are payable on October 15,2005 and
semiannually thereafter on April 15 and October 15 of each year until maturity or prior redemption.
The Bonds maturing on and after October 15, 2016 may be redeemed prior to their scheduled
maturities, by the Authority at the option and direction of the University, on October 15, 2015, or
on any date thereafter, at a redemption price equal to the principal amount to be redeemed plus
accrued interest from the most recent interest payment date to the date fixed for redemption.
The Bonds maturing on October 15,20 and October 15,20 (the "Term Bonds") are subject
to mandatory sinking fund redemption prior to their scheduled maturity, and will be redeemed by
the Authority, in part at a redemption price equal to the principal amount to be redeemed plus
accrued interest from the most recent interest payment date to the date of redemption, on the date
and in the principal amounts shown in the following schedule:
Term Bonds Maturing October 15, 20
Redemption Date Principal Amount
*Final Maturity
Term Bonds Maturing October 15, 20_
Redemption Date Principal Amount
* Final Maturity
f:\wdox\clients\oo9425\oooii\ioo74808.wpd/3 Schedule I - Page 2
APPROVED:
By:
Name: Dr. Roland K. Smith
Title: Vice President for Business Affairs
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EXHIBIT A
DEFINITIONS
As used in this Resolution the following terms and expressions shall have the meanings set
forth below, unless the text hereof specifically indicates otherwise:
"Annual Debt Service Requirements" means, for any Fiscal Year, the principal of and
interest on all Parity Obligations coming due at Maturity or Stated Maturity (or that could come due
on demand of the owner thereof other than by acceleration or other demand conditioned upon default
by the Board on such Debt, or be payable in respect of any required purchase of such Debt by the
Board) in such Fiscal Year, and, for such purposes, any one or more of the following rules shall
apply at the election of the Board:
(1) Committed Take Out. If the Board, or the Authority on behalf of the Board, has
entered into a Credit Agreement constituting a binding commitment within normal
commercial practice to discharge any of its Funded Debt at its Stated Maturity (or, if due on
demand, at any date on which demand may be made) or to purchase any of its Funded Debt
at any date on which such Debt is subject to required purchase, all under arrangements
whereby the obligation to repay the amounts advanced for such discharge or purchase
constitutes Funded Debt, then the portion of the Funded Debt committed to be discharged
or purchased shall be excluded from such calculation and the principal of and interest on the
Funded Debt incurred for such discharging or purchase that would be due in the Fiscal Year
for which the calculation is being made, if incurred at the Stated Maturity or purchase date
of the Funded Debt to be discharged or purchased, shall be added;
(2) Balloon Debt. If the principal (including the accretion of interest resulting from
original issue discount or compounding of interest) of any series or issue of Funded Debt due
(or payable in respect of any required purchase of such Funded Debt by the Board) in any
Fiscal Year either is equal to at least 25% of the total principal (including the accretion of
interest resulting from original issue discount or compounding of interest) of such Funded
Debt or exceeds by more than 50% the greatest amount of principal of such series or issue
of Funded Debt due in any preceding or succeeding Fiscal Year (such principal due in such
Fiscal Year for such series or issue of Funded Debt being referred to herein as "Balloon
Debt"), the amount of principal of such Balloon Debt taken into account during any Fiscal
Year shall be equal to the debt service calculated using the original principal amount of such
Balloon Debt amortized over the Term of Issue on a level debt service basis at an assumed
interest rate equal to the rate borne by such Balloon Debt on the date of calculation;
(3) Consent Sinking Fund. In the case of Balloon Debt (as defined in clause (2)
above), if a Designated Financial Officer shall deliver to the Board and the Authority an
Officer's Certificate providing for the retirement of (and the instrument creating such
Balloon Debt shall permit the retirement of), or for the accumulation of a sinking fund for
(and the instrument creating such Balloon Debt shall permit the accumulation of a sinking
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fund for), such Balloon Debt according to a fixed schedule stated in such Officer's Certificate
ending on or before the Fiscal Year in which such principal (and premium, if any) is due,
then the principal of (and, in the case of retirement, or to the extent provided for by the
sinking fund accumulation, the premium, if any, and interest and other debt service charges
on) such Balloon Debt shall be computed as if the same were due in accordance with such
schedule, provided that this clause (3) shall apply only to Balloon Debt for which the
installments previously scheduled have been paid or deposited to the sinking fund
established with respect to such Debt on or before the times required by such schedule; and
provided further that this clause (3) shall not apply where the Board has elected to apply the
rule set forth in clause (2) above;
(4) PrepaidDebt. Principal of and interest on Parity Obligations, or portions thereof,
shall not be included in the computation of the Annual Debt Service Requirements for any
Fiscal Year for which such principal or interest are payable from funds on deposit or set
aside in trust for the payment thereof at the time of such calculations (including without
limitation capitalized interest and accrued interest so deposited or set aside in trust) with a
financial institution acting as fiduciary with respect to the payment of such Debt;
(5) Variable Rate, As to any Parity Obligation that bears interest at a variable
interest rate which cannot be ascertained at the time of calculation of the Annual Debt
Service Requirement then, at the option of the Board, either: (1) an interest rate equal to the
average rate borne by such Parity Obligations (or by comparable debt in the event that such
Parity Obligations has not been outstanding during the preceding 24 months) for any 24
month period ending within 30 days prior to the date of calculation; or (2) an interest rate
equal to the 30-year Tax-Exempt Revenue Bond Index (as most recently published in The
Bond Buyer), shall be presumed to apply for all future dates, unless such index is no longer
published in The Bond Buyer, in which case an index of tax-exempt revenue bonds with
maturities of at least 20 years which is published in a newspaper or journal with national
circulation may be used for this purpose. If two Series of Parity Obligations which bear
interest at variable interest rates, or one or more maturities within a Series, of equal par
amounts, are issued simultaneously with inverse floating interest rates providing a composite
fixed interest rate for such Parity Obligations taken as a whole, such composite fixed rate
shall be used in determining the Annual Debt Service Requirement with respect to such
Parity Obligations;
(6) Guarantee. In the case of any guarantee, as described in clause (2) of the
definition of Debt, no obligation will be counted if the Board does not anticipate in its annual
budget that it will make any payments on the guarantee. If, however, the Board is making
payments on a guarantee or anticipates doing so in its annual budget, such obligation shall
be treated as Parity Obligations and calculations of Annual Debt Service Requirements with
respect to such guarantee shall be made assuming that the Board will make all additional
payments due under the guaranteed obligation. If the entity whose obligation is guaranteed
cures all defaults and the Board no longer anticipates making payments under the guarantee,
the guaranteed obligations shall not be included in the calculation of Annual Debt Service
F:\WDOX\CLIENTS\009425\00011M0074808.WPD / 3 A-2
Requirements;
(7) Commercial Paper. With respect to any Parity Obligations issued in the form of
commercial paper with maturities not exceeding 270 days, the interest on such Parity
Obligations shall be calculated in the manner provided in clause (5) of this definition and the
maturity schedule shall be calculated in the manner provided in clause (2) of this definition;
and
(8) Credit Agreement Payments. If the Board, or the Authority on behalf of the
Board, has entered into a Credit Agreement in connection with an issue of Debt, payments
due under the Credit Agreement (other than payments for fees and expenses), for either the
Board or, the Authority on behalf of the Board, as the case may be, or the Credit Provider,
shall be included in such calculation, except to the extent that the payments are already taken
into account under (1) through (7) above and any payments otherwise included above under
(1) through (7) which are to be replaced by payments under a Credit Agreement, from either
the Board or the Credit Provider, shall be excluded from such calculation.
With respect to any calculation of historic data, only those payments actually made in the subject
period shall be taken into account in making such calculation and, with respect to prospective
calculations, only those payments reasonably expected to be made in the subject period shall be
taken into account in making the calculation.
"Annual Direct Obligation" means the amount budgeted each Fiscal Year by the Board with
respect to each Participant in the Financing System to satisfy said Participant's proportion of debt
service (calculated based on said Participant's Direct Obligation) due by the Board in such Fiscal
Year on Outstanding Parity Obligations.
"Annual Obligation" means, with respect to each Participant in the Financing System and
for each Fiscal Year, said Participant's Annual Direct Ob